another spin

Apr 18, 2008 4 Replies
H


Here's a tax question posed to me by my son regarding some


> of his friends.
>
> Tenants of a rental property improve the property. The cost
> of labor plus materials is $6000. Their landlord pays them
> for the improvements by forgiving $6000 in rent payments.
> The landlord issues a 1099-MISC for the $6000 cost of the
> improvements to the tenants.
>

(balance snipped as non relevant.



So to put a different spin on things. Let's say the landlord rents only to nice looking women, and he doesn't need the income, and all his tenants are struggling to make ends meet, and.... well, you get the point.



Furthermore, to settle up the monthly rentals, tenants individually (or collectively; so much funner!) provide certain services in exchange therefore.



Question: who issues what 1099's to whom? and is it box 3 or box 7?



ChEAr$, Harlan LOL!


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D

Don't bait Mr. Adams.

I originally thought about using his first name in the above line, but decided against the pun.

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W

Would this arrangement not be considered a barter and theoretically be subject to tax treatment accordingly? If so, would it not confer a state of "professionalism" upon the women?

The likelihood of it being reported or 1099s being issued is about equal to that of the above questioner subscribing to the 'New York Times'.

Bill

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D

Technically, you normally need more than one client to be considered a professional.

It is against public policy to business deductions for expenses paid for meritricious relationships. So the landlord would have non-deductible personal expenses.

Since he has no rental income, he has no rental deductions and no depreciation. Talk about getting scr##w#&!

OTOH We should take up a collection and purchase a 3-year subscription to the Noo Yawk Times for you-know-who. LoL

Dick

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S

Exclusive contracts are not at all unusual in many professions.

And no depreciation recapture (at 25%) when he sells, so maybe not so screwed (the bad way).

Seth

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