[WSBARP] tax question

[David Daniel]

Listmates,

I certainly am not a tax advisor so I may have my terminology wrong here,
but here goes:

Client advises that he and his spouse need to sell their property within a
month from now to capture the $500k exclusion from capital gains on sale of
personal residence. Client wants to proceed with a seller-financing
transaction to a buyer who will pay little-to-nothing down. Can Client
capture the full benefit of the $500k exclusion on such a transaction even
if no (or very little) cash gain is recognized at the closing? Does it make
a difference if it is Note/DOT vs. REK?

Seems to me the exclusion would only apply to gain actually recognized
prior to the deadline (i.e. at closing), because to allow otherwise would
seem to create a loophole for Client to capture the benefit by simply
transferring the property to an insider (who could then subsequently sell
the property to a third party, without concern over the deadline, and then
agree (on the side) to a profit sharing arrangement with the original
owner/Client).

Hope that makes sense. Any insights? Thanks in advance.


*David C. Daniel*, Attorney

*____________________________________*
* DEMCO LAW FIRM, P.S.*

*____________________________________ **Office |* (206) 203-6000
*Email |* *ddaniel at demcolaw.com <ddaniel at demcolaw.com>*

5224 Wilson Ave. S., Suite 200

Seattle, WA 98118
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