[WSBARP] tax question

[David Daniel]

Thank you very much sir. Very concisely put. :)


*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


On Mon, May 18, 2020 at 2:28 PM Marvin Benson <marvinbensonlaw at gmail.com>
wrote:

> For the purpose of the exclusion of gain from the sale of taxpayers
> principal residence, there is nothing wrong with installment sales.   If
> the taxpayer later repossesses the residence, there are rules for
> recalculating the gain.  If the transaction were fraudulent there could be
> other rules involved.
>
> Marvin Benson
>
> On Mon, May 18, 2020 at 12:34 PM David Daniel <ddaniel at demcolaw.com>
> wrote:
>
>> 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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