Accounting Question - Posted by Kenny (FL)
Posted by Kenny (FL) on April 03, 2002 at 22:23:42:
First off, thank you EVERYONE on this board for providing valuable commentary on Mobile Home dealing, I am just getting started and have several deals working.
I have an accounting question. I realize that we must pay the taxes up front on any gains made on the sale of a mobile home. For example, I buy one for $2000 and sell it for $8000 with $1000 down and a note for 36 months, 12.75%, payments at $235.02. I owe tax on the $6000 gain in year 1 plus taxes on the interest I collect in year 1.
Now say my buyer pays for 1 year then I have to take the home back. I have paid the taxes on the gain, even though I have not fully realized the gain in my pocket! If I have to take the home back, can I claim the unrealized gain that I paid taxes on already as a loss? For I am SURE that when I go and sell the home again, I am gonna get taxed AGAIN on the sale, with an even lower cost basis.
Any insight is greatly appreciated!