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Re: Capital gains Question

some of you seem to understand but some of you do not so I will explain further. I found this land that had timber on it. It was cheap because it was land locked. I also found someone that wanted to sell their land which would then grant access. The plan was to buy both pieces of land and then sell the timber to pay my brother back for the purchase of the land. After the timber was logged then we were to sell the land and split the profit. To make it clear my brother did not know about this land until I told him about it. He was supposed to put up the money and I was supposed to handle all of the negotiations with the loggers, lumber mills and the sale of the land. Our expected profit was only going to be around $100,000. While I was doing this we found someone that offered us $300,000 for the land. We only paid $40,000 for the land. This is when my brother got greedy. He had heard that a verbal agreement was only binding for one year so he started using delaying tactics to keep from making any sales until after the year was up. Then he told me that I was out of the deal. I filed a notice of joint venture at the clerk and recorders office where the land deed was filed. He then filed a lawsuit against me. The judge ordered an arbitration. The arbitrator ruled in my favor. He refused to accept this. His lawyer then filed a bunch of motions and he was ruled against on every single one. It was obvious that he was going to lose so he settled with me. In that settlement agreement it was stipulated that the timber would be sold as soon as possible and then the land sold. I found a buyer that was willing to pay $340,000 only for the timber. He refused to sign. Then the timber market dropped. He ended up hiring a logger to cut the trees so I filed a lawsuit against him. The logger told me that my brother received over $100,000 from the timber sales. My father is dying of cancer and he asked that this fight be settled before he dies. To honor his wishes I agreed to settle for

80 acres to be transfered into my name. I now have a person that wants to buy it for $120,000. I have no problems paying long term capital gains on the entire $120,000 but I do not want to pay personal taxes on this money. If it comes to that I will wait to sell.
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Reply to
wolfman
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It seems to me that the consensus is that you need to show that you were a no-equity partner in this all along.

So at that point, you each stood to make $130,000.

In what State? Maybe he should sue whoever told him.

So now it's at $150,000 and he reneged on a signed agreement this time.

So you are up $120,000 less legal fees and selling expenses. Since you only expected $50,000, you're ahead of the game plus you know better than to deal with < expletives deleted > again - who by the way is up $260,000 less legal fees and selling expenses.

Your brother is fortunate he is not my brother. My father would, at a minimum, would have disowned him - and he has done that.

As far as I can tell, you got this land as part of an unwritten partnership agreement so it's a capital gain. You may need to revise prior years 1040's to deduct the legal fees as a business expense..

BTW, I wonder if he declared the $100,000+ from the timber sales on his tax return. If he did, maybe he deducted the $40,000 land cost from it? If you'd cheat your own family, why not the IRS?

Dick

Reply to
Dick Adams

Which he apparently did, to the satisfaction of the arbitrator and courts.

That's a separate issue. In Real Estate, oral agreements are generally not binding at all; other agreements can be provided it's _possible_ for them to be satisfied fast enough (typically 1 or 2 years). Seth

Reply to
Seth

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