Help - Land trust, Bank, and IRS??? - Posted by Jason-DTX

Posted by Jason-DTX on March 12, 1999 at 23:04:51:

You are right. That’s how this whole thing got started. I sold a property and they made the check out to the trustee since he is on the deed. He went to cash it and they asked for tax id numbers. We gave them the beneficiaries tax id #. Everything was ok until about a year later the bank called and wanted the trustee’s SSN. I didn’t want to give it up since its the beneficiary’s tax problem. They kept demanding the trustee’s SSN so I posted my question.
Jason Windholz

Help - Land trust, Bank, and IRS??? - Posted by Jason-DTX

Posted by Jason-DTX on March 11, 1999 at 15:08:15:

I sold a property that was in a land trust and received a check for $14,000 made out to the trustee and the land trust. My corp was the beneficiary. The trustee went to the bank, cashed the check and gave the corps tax id number. Its been about a year and now the bank is calling and asking for the trustee’s SSN. They said the IRS returned their form because the tax id # didn’t match the Trustee. They said it will report the income on the corps tax id but they insist on me giving them the trustee’s SSN since he was the one who actually cashed the check. Am I required to give it up? The bank said if they don’t get it then the IRS will start snooping around into the trustee’s other business. Should I just give them the SSN or not? Actually I don’t know the # but I can ask the trustee for it if needed.
Jason

Re: Help - Land trust, Bank, and IRS??? - Posted by Bud Branstetter

Posted by Bud Branstetter on March 11, 1999 at 18:43:29:

Jason,

I’ve had trouble even depositing checks made out to a land trust. The banks are looking at the trust as a business and have even refused to cash the check when presented at the makers bank.

Solution: Have the trustee request the proceeds be made out to the Corp. That ID will be used on the 1099. Your Corp will have a bank account and should be able to deposit the check.

Re: Help - Land trust, Bank, and IRS??? - Posted by christy

Posted by christy on March 11, 1999 at 17:44:58:

Since the transaction was over $10,000, the bank must file a currency transaction report (CTR) with the IRS. In order to file this form they need the SSN of the person who did the actual transaction and also the SSN/TIN of the “beneficiary” of the transaction. Since the transaction was in the name of the business it will be reported under the TIN of the corp. Don’t worry, this is a very common occurence. I work in banking and even the teenage cashiers that work for department stores, etc that bring in their employers cash deposits must provide their SSN.

Re: Help - Land trust, Bank, and IRS??? - Posted by Bronchick

Posted by Bronchick on March 11, 1999 at 17:43:02:

It is my understanding that the federal reserve requires ssn#'s of all signatories on accounts, even if the account is not owned by the signatory.

If the trustee cashed the check for CASH, then his ssn# is required for the IRS reporting, since it was a cash transaction exceeding $10,000. As an atty, I have had to sign these forms and give my ssn#, even though the money I received was for a closing and not mine.

Land Trust, Corp, LLC Follow-up Question - Posted by John Katitus

Posted by John Katitus on March 12, 1999 at 24:36:38:

My new structure, thanks (again) to Bill Bronchick, is rental properties held in separate Land Trusts with one LLC as Beneficiary for all and one C-corporation as Trustee for all. If checks are written to the corp, as Bud suggests, will this screw up my flow through to the LLC and subsequently to my return? Will running the checks through my corporation complicate that tax return? Thanks to all.

Re: Help - Land trust, Bank, and IRS??? - Posted by Brad Crouch

Posted by Brad Crouch on March 11, 1999 at 19:57:16:

Bud,

I thought that corporations didn’t get 1099 forms. I thought this 1099 stuff was only for unincorporated businesses that earned over $600 in any calendar year. Did I learn that wrong?

Thanks,

Brad

Re: Land Trust, Corp, LLC Follow-up Question - Posted by Jason-DTX

Posted by Jason-DTX on March 12, 1999 at 09:16:47:

I use an individual trustee and the trustee signs a management agreement with my corp. Then my corp can collect checks, pay expenses and then send me the rest as would any property management company.
However if your corp is trustee then you might want to be careful on how many duties you give to the corp(trustee) so that it won’t make your trust a taxing entity.
Bud’s suggestion was when the corp was the beneficiary, not the trustee.
Jason Windholz

Re: Help - Land trust, Bank, and IRS??? - Posted by Jason-DTX

Posted by Jason-DTX on March 12, 1999 at 09:26:06:

I’m not sure of the form # but any time you sell a property and receive money then the title company will send a form to the IRS stateing how much you made. It doesn’t matter if your a person, corp, patnership, LLC, or trust. They are going send in the form to the IRS to show you sold real estate and made some money.
I don’t know if its one form for all entities or a different form for different entities but it accomplishes the same thing.
Jason Windholz

Re: Help - Land trust, Bank, and IRS??? - Posted by Bill Gatten

Posted by Bill Gatten on March 12, 1999 at 20:33:26:

This may not be germain to this particular question, but remember that in a bona fide land trust, the trustee has no tax reporting function, as it is the beneficiaries who are required to treat themselves as owners of the real estate on their own income filings as per IRS regulations. The only time the Trustee’s tax ID No. would/should appear anywhere is perhaps on a Notice of Fiduciary Responsibility (form #56) when the trust is created; however, to date the IRS has returned every single one of these forms our accountancy has tried to file, indicating that the form is not required under a land trust arrangment we keep sending them: they keep sending them back).

Bill

Re: Help - Land trust, Bank, and IRS??? - Posted by Brad Crouch

Posted by Brad Crouch on March 12, 1999 at 17:51:19:

Thanks Jason!

Brad