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A C Corporation is involved in purchasing tax lien certificates from counties. Does somebody knows how
should be structured this kind of return?
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They would be purchasing non depreciable assets.
Answers are easy. Questions are hard!
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The counties are reporting the interest income when the certificate is redeemed.
Is it enough for the corporation to show the income which is received as the corporate profit or it is necessary to show the purchase price of the certificate and the money received back from the county. The difference will be the interest reported by the county with one small problem that we will have as a difference between gross receipt and cost of goods sold and the county report it as a blank interest.
Which way to go?
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Just report the interest. It's not inventory, although sometimes these are bought and sold in a secondary market. And if it gets converted to property through foreclosure, the cost of the certificate is part of basis.
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Thanks a lot Bob.
This is what I have on my mind.
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Thanks again.
