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[Gretel]

Cash basis contractor just closed on land. Part of this land, after it is developed, will be sold to someone who advanced some of his anticipated cost. Sale will happen next year. I assume the advance needs to be included in this years income.

But what about restrictions. What kind of restrictions would prevent the inclusion in income this year, if any? Maybe if customer only advanced money to buy if land is developed? Is this restriction than met when development starts or when it is finished?

As always, thanks a million.

[jainen]

Escrow

If the payment were in the nature of a good faith deposit or performance bond, it would remain the property of the buyer until released from escrow.

[Gretel]

Don't think escrow will work

I always thought escrow involves a third party. Maybe that is not so. Well, it might not be applicable here anyway since part of the money is already used by the seller to buy the land in the first place.

The money will be used as working capital until the lots are developed and can be sold. At that time the depositor will get a contract with a downpayment required and then he has to pay whatever wasn't paid already.