OfflineA while back I attended a seminar held by the Baltimore REIA regarding tips and how-to's for filing taxes as an investor. I actually purchased the Goldmine Tax Manual and was really impressed with all the information that was given.
One of the tips was that we shouldn't put assignment deals on the IRS Schedule C. Instead assignment deals should be put on Form4797 and reported as ordinary income on page 1 of that form, Part II "Ordinary Gains and Losses". We were advised that using Schedule C is a direct admission that we operate as a "dealer" rather than an "investor". It was also suggested that we list occupation as "Property Manager" at the bottom of the 1040 because managing is akin to rental (investor) as opposed to selling (dealer).
Apparently, liquidation of investment is a defense against having dealer status.
Are wholesalers actually using this form 4794 instead of Schedule C? If so, how has it been working for you?
Thanks
Always striving to move forward toward better times!
Verna (newage8767)
This is very interesting. I will have to take note of this and run it by my CPA.
Thanks for the share.
Karen
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I would say talk to your CPA and having an REI CPA is even better. Mine invests in real estate himself. So they know more about how to guide you. Best wishes!
www.tw4homes.com website
https://tvallc.isrefer.com/go/RehabLite/reigirl/ FREE SOFTWARE FOR WHOLESALERS, REHABBERS AND AGENTS! Present professional looking deals to buyers and lenders as well as run your numbers and get the ROI.
wholesaling is holding inventory and is taxed more heavily under ordinary income for example. They can show you what you need to get in a better tax bracket!
www.tw4homes.com website
https://tvallc.isrefer.com/go/RehabLite/reigirl/ FREE SOFTWARE FOR WHOLESALERS, REHABBERS AND AGENTS! Present professional looking deals to buyers and lenders as well as run your numbers and get the ROI.