paying taxes on completed deals - Posted by Robin(AZ)

Posted by JHyre in Ohio on July 08, 2002 at 07:49:18:


The post is talking about being a “dealer” for federal income tax purposes- which Lonnie Dealers certainly are, see my How-To Article on the subject. You are talking about being a “dealer” for state licensing purposes- a totally different and non-income-tax related issue.

John Hyre

paying taxes on completed deals - Posted by Robin(AZ)

Posted by Robin(AZ) on July 07, 2002 at 16:08:58:

I searched the archives, but pulled up too much. My understanding was that, when you sell a MH, you pay taxes on the entire profit in the yearthat the sale was made-- NOT on the payments received each year, for the life of the loan.

I met with an accountant on Friday, and he said that was wrong. That the IRS will consider 50% of the down as income, 50% as return on capital investment, and 50% of manthly principal payment plus interst payments as income, and the remaining 50% as return of capital invested.

When I told him what I understood to be the tax implications of Lonnie deals, he flat out said I was wrong. I’d be SUPER happy to hear I am wrong, but I trust you guys more than someone who ISN’T doing Lonnie deals!!!

If anyone could take the time to answer, or in the alternative, direct me to a post in the archives, I’d be grateful.

Happy hunting!


Your CPA is smoking crack… - Posted by JHyre in Ohio

Posted by JHyre in Ohio on July 08, 2002 at 08:00:47:

Generalist tax advisors rarely understand RE…I used to not say that out of courtesy to fellow practicioners, but I’ve since gotten plenty of clients because their non-specialized advisors foul things up, but still keep right on billing! Search with the term “insomnia” for a post that gives an idea of how to partially defuse the IRS “Dealer” issue- I can also directly advise you- my rates are reasonable and MUCH cheaper than incorrect advice. In lieu of using the cash method as I’ve described, or other legitimate techniques (Roth IRA, etc.), Lonnie Deals ARE “Dealer” Sales and the tax is due up-front. Should you wish to continue paying your CPA, I’d get some cites for his odd view of the law…I will gladly show the error of his ways.

John Hyre

Re: paying taxes on completed deals - Posted by Tony-VA

Posted by Tony-VA on July 07, 2002 at 16:22:13:

Your accountant is not taking into account the Dealer Status treatment these deals can receive from the IRS.

Posts by John Hyre will be the ones you wish to read and take to your CPA. The treatment can vary based upon the volume and other types of deals you are doing. If you are doing strictly Lonnie deals, you are likely to have a tough argument that you are not buying with the intent to sell (thus a dealer).

There are strategies such as Ernest Tew’s Net Lease with Option to buy which can help a great deal. This works only IF your park will allow it. Most parks will not unfortunately.

I think you may even find a Dealer Status article in the “How To Article” Section that Hyre wrote.

Best Wishes,


Dealer Status Question - Posted by Gary Baird

Posted by Gary Baird on July 07, 2002 at 23:12:12:

In Indiana I am allowed to do 11 deals without being considered a dealer, which means that if I set up two or three corporations I can buy 11 for each corp. I will never have to obtain a dealer’s license, so my question is, will I still incur the same dealer penalties that you are speaking of?

Thanks for the help,