A C corporation is involved in purchasing tax lien certificates from counties. Does somebody knows how should be structured this tax return?

Forum|Forum|5 years ago
March 24, 2021
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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?

ProConnect Tax

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Best answer by BobKamman

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.

George4Tacks

Level 15

They would be purchasing non depreciable assets.

Answers are easy. Questions are hard!

A

archa5Author

Level 3

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?

BobKammanAnswer

Level 15

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.

A

archa5Author

Level 3

Thanks a lot Bob.
This is what I have on my mind.

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