taxbrewster Posted August 18, 2017 Report Posted August 18, 2017 Looking for some help here. I have a client who is looking at a syndicated real estate investment and is being told the following - just trying to make sense of it. It is somewhat new to me. Investment $50K / Minimum ROI over 2 years is 25% / Hopeful return of $12,500 They would report the income and return on investment on a 1099-Misc Box 3 - stating that it would only be taxed at 15%. Resulting in a tax liability of $1875. How is this being treated as capital gains and not ordinary income (35% tax bracket)? Then how would this be reported in ATX because everything I run has it getting hit at his normal rate not a capital gain rate. I have read so much tonight on the subject I think I am confusing myself. Any suggestions would be helpful. Thanks! Quote
ILLMAS Posted August 18, 2017 Report Posted August 18, 2017 More likely the investors will be receiving a K-1 with amounts on interest and rental income lines. 1 Quote
Roberts Posted August 18, 2017 Report Posted August 18, 2017 When it says ROI of 25%, I think you should probably read that as "we hope to return 25% of your money". I've never had an investor like that receive a 1099m. As Illmas says - K1 is the appropriate form. 2 Quote
taxbrewster Posted August 18, 2017 Author Report Posted August 18, 2017 Thanks for the comments, agreed, I have red flags going up everywhere as well. My first thought as well was it should be issued as a K1...In the latest development the company said they had "flexibility to report the income on a 1099 of his choice" My answer was say have a nice day and walk away... 2 Quote
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