Posted by JHyre in Ohio on February 21, 2002 at 17:58:04:
I’m in Findlay and take clients for tax & asset protection issues…I generally do not do RE contracts, closings, etc…you’d need someone local for that anyway.
Your repair money is taxable income to the recipient entity (cash received), but any repairs that you spend the money on is deductible for that entity or capitalized (and possibly depreciated), depending on what you spend the repair money on. If you pay the repair company to do the work, that is also income to the repair company, less deductions for materials, etc.
In the future, I’d have the repair money paid directly to your repair company by the seller…you then have a good argument for no income to the buying company, only to the repair company. This should produce a better and simpler result, because giving the payments to your buying company causes income, but may result in deductions WAY down the road…paying the repair company directly may avoid that timing mismatch.