Why me? LLC sold property to son, gift of equity!

[Margaret CPA in OH]

So here we are at the last minute and I just got the sale document. LLC, mom and dad, bought house, rehabbed (not the first), and sold to son an dil. I see the selling price of $101,000 and Gift of Equity of $15,150. They will not be clients after this year, I swear, but how is this to be handled? Reduce the selling price?

[kcjenkins]

Here is a link to an explanation I've used to give to clients to explain this, it's pretty clear, plus has a link to the related IRS info.

http://www.mtgprofes...equity_gift.htm

Yes, the selling price for reporting the sale would be 101,000 - $15,150. At that small a gift, there would be no problems with gift, so it's pretty much something you ignore on the parent's return, once you net out the gift. For the kids, their basis is the 101K.

[Margaret CPA in OH]

Thanks, KC. I wasn't worried about the gift from mom and dad, it was the fact that the LLC (from their perspective) gifted to the son and wife. Isn't it amazing how so many don't quite grasp the concept that their company is a separate entity?

So with the reduced selling price, I expect the proceeds would also be reduced as the amounts 'paid' by borrower include this same gift of equity. Then there is the famous 'seller's concessions amounting to $4033.81. It's almost as if the selling price was determined then figures had to be input to get there, maybe to warrant the amount of the loan? What do I do with that?

I'm grumpy about this in general because I received the file Friday night and the documents today. And I leave for vacation Sept. 8.

[kcjenkins]

It's always the last few that have the most problems, isn't it?