<html xmlns:v="urn:schemas-microsoft-com:vml" xmlns:o="urn:schemas-microsoft-com:office:office" xmlns:w="urn:schemas-microsoft-com:office:word" xmlns:m="http://schemas.microsoft.com/office/2004/12/omml" xmlns="http://www.w3.org/TR/REC-html40">
<head>
<meta http-equiv="Content-Type" content="text/html; charset=us-ascii">
<meta name="Generator" content="Microsoft Word 15 (filtered medium)">
<!--[if !mso]><style>v\:* {behavior:url(#default#VML);}
o\:* {behavior:url(#default#VML);}
w\:* {behavior:url(#default#VML);}
.shape {behavior:url(#default#VML);}
</style><![endif]--><style><!--
/* Font Definitions */
@font-face
{font-family:"Cambria Math";
panose-1:2 4 5 3 5 4 6 3 2 4;}
@font-face
{font-family:Calibri;
panose-1:2 15 5 2 2 2 4 3 2 4;}
@font-face
{font-family:Verdana;
panose-1:2 11 6 4 3 5 4 4 2 4;}
@font-face
{font-family:Garamond;
panose-1:2 2 4 4 3 3 1 1 8 3;}
/* Style Definitions */
p.MsoNormal, li.MsoNormal, div.MsoNormal
{margin:0in;
margin-bottom:.0001pt;
font-size:12.0pt;
font-family:"Times New Roman",serif;}
a:link, span.MsoHyperlink
{mso-style-priority:99;
color:blue;
text-decoration:underline;}
a:visited, span.MsoHyperlinkFollowed
{mso-style-priority:99;
color:purple;
text-decoration:underline;}
p.xmsonormal, li.xmsonormal, div.xmsonormal
{mso-style-name:x_msonormal;
mso-margin-top-alt:auto;
margin-right:0in;
mso-margin-bottom-alt:auto;
margin-left:0in;
font-size:12.0pt;
font-family:"Times New Roman",serif;}
span.EmailStyle18
{mso-style-type:personal-reply;
font-family:"Calibri",sans-serif;
color:#1F497D;}
.MsoChpDefault
{mso-style-type:export-only;
font-size:10.0pt;}
@page WordSection1
{size:8.5in 11.0in;
margin:1.0in 1.0in 1.0in 1.0in;}
div.WordSection1
{page:WordSection1;}
--></style><!--[if gte mso 9]><xml>
<o:shapedefaults v:ext="edit" spidmax="1026" />
</xml><![endif]--><!--[if gte mso 9]><xml>
<o:shapelayout v:ext="edit">
<o:idmap v:ext="edit" data="1" />
</o:shapelayout></xml><![endif]-->
</head>
<body lang="EN-US" link="blue" vlink="purple">
<div class="WordSection1">
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri",sans-serif;color:#1F497D">Fyi, interesting I thought..<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri",sans-serif;color:#1F497D"><o:p> </o:p></span></p>
<div>
<div style="border:none;border-top:solid #E1E1E1 1.0pt;padding:3.0pt 0in 0in 0in">
<p class="MsoNormal"><b><span style="font-size:11.0pt;font-family:"Calibri",sans-serif">From:</span></b><span style="font-size:11.0pt;font-family:"Calibri",sans-serif"> wsbarp-bounces@lists.wsbarppt.com [mailto:wsbarp-bounces@lists.wsbarppt.com]
<b>On Behalf Of </b>Craig Gourley<br>
<b>Sent:</b> Monday, May 18, 2020 2:55 PM<br>
<b>To:</b> WSBA Real Property Listserv <wsbarp@lists.wsbarppt.com><br>
<b>Subject:</b> Re: [WSBARP] tax question<o:p></o:p></span></p>
</div>
</div>
<p class="MsoNormal"><o:p> </o:p></p>
<div>
<p class="MsoNormal" style="margin-bottom:12.0pt"><span style="font-size:11.0pt;font-family:"Arial",sans-serif;color:black">As far as the reason for this and the proceedure, I am presuming they have been using it as a rental for the last few years. Code section
121 allows the $500k of tax free gain to married couples filing jointly if the home has been their principal residence for 2 of the last 5 years. So if they are close, they need to sell before they exceed that 3 years of non primary residence use. They appear
to be selling on a section 453 installment sale. My guess is that they plan to elect out of 453, accelerate the gain and recognize it in the year of sale. This accelerated gain is then considered exempt under Section121. The net result is future payments on
that note are tax free (except the interest portion) up to the $500k amount. I would suggest using a note and DOT as I don't know if you can accelerate gain on a real estate contract but know you can on a note.. Hope this helps. Craig
<o:p></o:p></span></p>
</div>
<div>
<div>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Arial",sans-serif;color:black">Sent from my Verizon, Samsung Galaxy smartphone<o:p></o:p></span></p>
</div>
<div>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Arial",sans-serif;color:black">Get
<a href="https://aka.ms/ghei36">Outlook for Android</a><o:p></o:p></span></p>
</div>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Arial",sans-serif;color:black"><o:p> </o:p></span></p>
</div>
<div class="MsoNormal" align="center" style="text-align:center">
<hr size="2" width="98%" align="center">
</div>
<div id="divRplyFwdMsg">
<p class="MsoNormal"><b><span style="font-size:11.0pt;font-family:"Calibri",sans-serif;color:black">From:</span></b><span style="font-size:11.0pt;font-family:"Calibri",sans-serif;color:black">
<a href="mailto:wsbarp-bounces@lists.wsbarppt.com">wsbarp-bounces@lists.wsbarppt.com</a> <<a href="mailto:wsbarp-bounces@lists.wsbarppt.com">wsbarp-bounces@lists.wsbarppt.com</a>> on behalf of David Daniel <<a href="mailto:ddaniel@demcolaw.com">ddaniel@demcolaw.com</a>><br>
<b>Sent:</b> Monday, May 18, 2020 2:33:27 PM<br>
<b>To:</b> WSBA Real Property Listserv <<a href="mailto:wsbarp@lists.wsbarppt.com">wsbarp@lists.wsbarppt.com</a>><br>
<b>Subject:</b> Re: [WSBARP] tax question</span> <o:p></o:p></p>
<div>
<p class="MsoNormal"> <o:p></o:p></p>
</div>
</div>
<div>
<div>
<div>
<p class="MsoNormal"><span style="font-family:"Verdana",sans-serif;color:#073763">Thank you very much sir. Very concisely put. :)<o:p></o:p></span></p>
</div>
<div>
<div>
<div>
<div>
<div>
<div>
<div>
<div>
<div>
<div>
<div>
<div>
<div>
<div>
<div>
<div>
<div>
<div>
<div>
<p class="xmsonormal" style="background-image:initial;background-position:initial;background-repeat:initial">
<o:p> </o:p></p>
<p class="xmsonormal" style="background-image:initial;background-position:initial;background-repeat:initial">
<b><span style="font-size:11.0pt;font-family:"Garamond",serif;color:#073763">David C. Daniel</span></b><span style="font-size:11.0pt;font-family:"Garamond",serif;color:#073763">, Attorney</span><o:p></o:p></p>
<p class="xmsonormal" style="background-image:initial;background-position:initial;background-repeat:initial">
<u><sup><span style="font-size:11.0pt;font-family:"Garamond",serif;color:#073763">____________________________________</span></sup></u><span style="font-size:11.0pt;font-family:"Garamond",serif;color:#073763"><br>
</span><b><span style="font-size:13.5pt;font-family:"Garamond",serif;color:#073763"> DEMCO LAW FIRM, P.S.</span></b><span style="font-size:11.0pt;font-family:"Garamond",serif;color:#073763"><br>
<u><sup>____________________________________</sup><br>
</u><b>Office |</b> (206) 203-6000<br>
<b>Email |</b> </span><u><span style="font-size:11.0pt;font-family:"Garamond",serif;color:#1155CC"><a href="mailto:ddaniel@demcolaw.com" target="_blank">ddaniel@demcolaw.com</a></span></u><o:p></o:p></p>
<p class="xmsonormal" style="background-image:initial;background-position:initial;background-repeat:initial">
<span style="font-size:11.0pt;font-family:"Garamond",serif;color:#073763">5224 Wilson Ave. S., Suite 200</span><o:p></o:p></p>
<p class="xmsonormal" style="background-image:initial;background-position:initial;background-repeat:initial">
<span style="font-size:11.0pt;font-family:"Garamond",serif;color:#073763">Seattle, WA 98118</span><o:p></o:p></p>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
<p class="MsoNormal"><o:p> </o:p></p>
</div>
<p class="MsoNormal"><o:p> </o:p></p>
<div>
<div>
<p class="MsoNormal">On Mon, May 18, 2020 at 2:28 PM Marvin Benson <<a href="mailto:marvinbensonlaw@gmail.com">marvinbensonlaw@gmail.com</a>> wrote:<o:p></o:p></p>
</div>
<blockquote style="border:none;border-left:solid #CCCCCC 1.0pt;padding:0in 0in 0in 6.0pt;margin-left:4.8pt;margin-right:0in">
<div>
<p class="MsoNormal">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. <o:p></o:p></p>
<div>
<p class="MsoNormal"><o:p> </o:p></p>
</div>
<div>
<p class="MsoNormal">Marvin Benson<o:p></o:p></p>
</div>
</div>
<p class="MsoNormal"><o:p> </o:p></p>
<div>
<div>
<p class="MsoNormal">On Mon, May 18, 2020 at 12:34 PM David Daniel <<a href="mailto:ddaniel@demcolaw.com" target="_blank">ddaniel@demcolaw.com</a>> wrote:<o:p></o:p></p>
</div>
<blockquote style="border:none;border-left:solid #CCCCCC 1.0pt;padding:0in 0in 0in 6.0pt;margin-left:4.8pt;margin-right:0in">
<div>
<div>
<p class="MsoNormal"><span style="font-family:"Verdana",sans-serif;color:#073763">Listmates,<o:p></o:p></span></p>
</div>
<div>
<p class="MsoNormal"><span style="font-family:"Verdana",sans-serif;color:#073763"><o:p> </o:p></span></p>
</div>
<div>
<p class="MsoNormal"><span style="font-family:"Verdana",sans-serif;color:#073763">I certainly am not a tax advisor so I may have my terminology wrong here, but here goes:<o:p></o:p></span></p>
</div>
<div>
<p class="MsoNormal"><span style="font-family:"Verdana",sans-serif;color:#073763"><o:p> </o:p></span></p>
</div>
<div>
<p class="MsoNormal"><span style="font-family:"Verdana",sans-serif;color:#073763">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? <o:p></o:p></span></p>
</div>
<div>
<p class="MsoNormal"><span style="font-family:"Verdana",sans-serif;color:#073763"><o:p> </o:p></span></p>
</div>
<div>
<p class="MsoNormal"><span style="font-family:"Verdana",sans-serif;color:#073763">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). <o:p></o:p></span></p>
</div>
<div>
<p class="MsoNormal"><span style="font-family:"Verdana",sans-serif;color:#073763"><o:p> </o:p></span></p>
</div>
<div>
<p class="MsoNormal"><span style="font-family:"Verdana",sans-serif;color:#073763">Hope that makes sense. Any insights? Thanks in advance.<o:p></o:p></span></p>
</div>
<div>
<p class="MsoNormal"><span style="font-family:"Verdana",sans-serif;color:#073763"><o:p> </o:p></span></p>
</div>
<div>
<div>
<div>
<div>
<div>
<div>
<div>
<div>
<div>
<div>
<div>
<div>
<div>
<div>
<div>
<div>
<div>
<div>
<div>
<p class="xmsonormal" style="background-image:initial;background-position:initial;background-repeat:initial">
<o:p> </o:p></p>
<p class="xmsonormal" style="background-image:initial;background-position:initial;background-repeat:initial">
<b><span style="font-size:11.0pt;font-family:"Garamond",serif;color:#073763">David C. Daniel</span></b><span style="font-size:11.0pt;font-family:"Garamond",serif;color:#073763">, Attorney</span><o:p></o:p></p>
<p class="xmsonormal" style="background-image:initial;background-position:initial;background-repeat:initial">
<u><sup><span style="font-size:11.0pt;font-family:"Garamond",serif;color:#073763">____________________________________</span></sup></u><span style="font-size:11.0pt;font-family:"Garamond",serif;color:#073763"><br>
</span><b><span style="font-size:13.5pt;font-family:"Garamond",serif;color:#073763"> DEMCO LAW FIRM, P.S.</span></b><span style="font-size:11.0pt;font-family:"Garamond",serif;color:#073763"><br>
<u><sup>____________________________________</sup><br>
</u><b>Office |</b> (206) 203-6000<br>
<b>Email |</b> </span><u><span style="font-size:11.0pt;font-family:"Garamond",serif;color:#1155CC"><a href="mailto:ddaniel@demcolaw.com" target="_blank">ddaniel@demcolaw.com</a></span></u><o:p></o:p></p>
<p class="xmsonormal" style="background-image:initial;background-position:initial;background-repeat:initial">
<span style="font-size:11.0pt;font-family:"Garamond",serif;color:#073763">5224 Wilson Ave. S., Suite 200</span><o:p></o:p></p>
<p class="xmsonormal" style="background-image:initial;background-position:initial;background-repeat:initial">
<span style="font-size:11.0pt;font-family:"Garamond",serif;color:#073763">Seattle, WA 98118</span><o:p></o:p></p>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
<p class="MsoNormal">***Disclaimer: Please note that RPPT listserv participation is not restricted to practicing attorneys and may include non-practicing attorneys, law students, professionals working in related fields, and others.***<br>
<br>
_______________________________________________<br>
WSBARP mailing list<br>
<a href="mailto:WSBARP@lists.wsbarppt.com" target="_blank">WSBARP@lists.wsbarppt.com</a><br>
<a href="http://mailman.fsr.com/mailman/listinfo/wsbarp" target="_blank">http://mailman.fsr.com/mailman/listinfo/wsbarp</a><o:p></o:p></p>
</blockquote>
</div>
<p class="MsoNormal">***Disclaimer: Please note that RPPT listserv participation is not restricted to practicing attorneys and may include non-practicing attorneys, law students, professionals working in related fields, and others.***<br>
<br>
_______________________________________________<br>
WSBARP mailing list<br>
<a href="mailto:WSBARP@lists.wsbarppt.com" target="_blank">WSBARP@lists.wsbarppt.com</a><br>
<a href="http://mailman.fsr.com/mailman/listinfo/wsbarp" target="_blank">http://mailman.fsr.com/mailman/listinfo/wsbarp</a><o:p></o:p></p>
</blockquote>
</div>
</div>
</div>
</body>
</html>