Need your help in structuring a plan for selling building lots to reduce I.R.S. tax burden. - Posted by Thurman
Posted by Thurman on June 11, 2000 at 22:49:17:
I’m in the process of buying some building lots for $8,000 (total price)and sell them for $20,000 (contract for deed).
Problem: I understand that the I.R.S. consider an installment sale the same as a cash sale, which means that I am going to have to pay income tax for the year of $3360. Since my net income, after total year payment to my seller of $2040, for the first year is about $1488. Which means out of pocket payment to the I.R.S. of $1872. That doesn’t make me happy.
Is there a better way to sell these lots so as to reduce the tax burden for the first year? The Fair Market Value on these lots are $12,000.
Any constructive ideas would be appreciated.