Sale of Principle Residence

[sharpcougar]

Evening everyone.

I am starting to get some clients that are active in real estate (property flippers). Couple of questions please

1. Are you aware of a good CPE course that goes over HUD-1 and how to record basis and then using the sale closing statement to record the gain?

2. A totally separate question. If a client sold his house and never received a 1099-S and the gain was much less than the $250,000. Does he have to put that on the tax return? What if they receive the 1099-S, that goes on schedule D?

Thank you again.

[sjrcpa]

2. I always put the sale on Sch D. There have been too many times clients said they didn't get a 1099-S but then IRS comes calling and says you didn't report the 1099-S proceeds on your return.

[Accountant-Man]

It's been a while, but I think the instructions say you don't have to report it without a 1099 S, but I also report it anyway.

[rbynaker]

TheTaxBook has a good reference page.

If they're flipping on a regular and continuous basis with a profit motive, that's inventory that goes on Sch C instead of an investment on Sch D.

For clients who sell the home that they live in, I also report on Sch D even if not required.  Property values around here are so high that there's almost guaranteed to be a 1099-S out there somewhere.  The last property I sold had it buried in the closing docs.  It takes less time to report it and exclude the gain than it does to convince the taxpayer that it exists and they need to find it.

[sjrcpa]

Or to deal with the IRS  correspondence.