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    Sale of Land

    Here we go again.

    Joan received from her deceases husband a piece of land from her husbands estate on 11/3084 which was valued at $50,244.00. She has held this property and paid all property taxes on it since than.

    She sold the land on 10/25/05 for $307,000.00

    She paid to have it subdivided - this cost $14,590.00
    Paid for a perk test - $475.00
    She paid Realtor - $15,000.00
    Town of Plymouth property Tax - $94.27
    Legal fees - $600.00
    Receiving fees of - $75.00
    State tax/stamp Deed - $1399.92

    She didn't receive the whole $307,000.00 at the close, she held a note for $30,000.00 on it, which the buyer was suppose to have paid in full by 2/21/06, which it hasn't and she gotten a lawyer to file suit, b/c they won't answer her calls. In the note that was signed, the buyer will be charged $500.00 a month until paid, the note is secured by the land and naming Joan as the 2nd Mortgage.

    Question do I claim the whole $307,000.00 or subtract the $30,000.00 from this? The 1099-S is reporting the whole amount, plus it has $71.01 in real estate tax reported.

    What can I take to make the cost basis higher?

    #2
    Installment sale

    This is an installment sale. Form 6252. You report a gross profit percentage of all the principal received in 2005 and all of the interest.

    Did you get a statement from an escrow company showing the interest? If not, and if the buyer made more than one payment then you can run an amortization schedule.

    Be careful to report all the principal received in 2005 - this is not always clear from the closing statement. Basically it is the sale price minus the unpaid balance at the end of the year. The taxable part is principal times your gross profit percentage.

    The closing costs are handled on the form 6252 and you take them ratably.

    The sale price is always on the 1099S. This number will be your beginning number on the 6252.
    JG

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      #3
      Sale of Land

      Thank you for posting a note. I was getting a little tired last night trying to think about it. Your post is greatly appreciated.

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