Time Share Upgrade

[Possi]

I have never seen this one before! 

Client has a timeshare with Vista Vacation and is issued a 1099S for about $35,174.

They sold to buy a bigger one with Sheraton Flex... but here's the kicker... 

The closing for Sheraton Flex ($64k) shows a credit on line 209a says "Equity Credit from Seller" for $35,174. 

I believe the 1099S needs to be addressed on the Sch D, but I'm not real sure HOW. It shouldn't be a gain since the money went straight into the upscaled timeshare. 

I can't seem to chase this down. 

Thanks for any help! 

Donna
 

[BrewOne]

the gain, if any, would only be deferred in a like-kind exchange.

Otherwise, as personal use property--a gain would be reported on Schedule D ($35,174 minus cost), a loss would be a wash (but should be reported because of the 1099-S). 

[Possi]

11 minutes ago, BrewOne said:

the gain, if any, would only be deferred in a like-kind exchange.

Otherwise, as personal use property--a gain would be reported on Schedule D ($35,174 minus cost), a loss would be a wash (but should be reported because of the 1099-S). 

So, I can report it as a like-kind exchange. Great!

[BrewOne]

Very specific conditions must be met to claim a like-kind exchange.  Bear in mind, you have to deal with the IRS definition of "like-kind exchange"

For starters, personal use property is excluded.

[BulldogTom]

19 minutes ago, Possi said:

So, I can report it as a like-kind exchange. Great!

Whoa - not so fast....  You MAY have a LKE on your hands, but double check the rules were followed.

Tom
Longview, TX

[Lee B]

Some timeshares are fractional ownership which can be considered real property. Other kinds of timeshares are not,

so you need to make some inquiries and find out what kind of timeshare your client owns.

 

[Possi]

3 hours ago, Lee B said:

Some timeshares are fractional ownership which can be considered real property. Other kinds of timeshares are not,

so you need to make some inquiries and find out what kind of timeshare your client owns.

 

If it was anything but real property, I don't THINK the 1099S would have been issued. 

I was afraid of special rules for LKE, thinking an attorney had to make it happen, too. 

So, I'll get their original cost and they will have to realize the gain on the sale. 

Thanks for straightening me out.