Posted by Steve Heller on April 11, 1999 at 17:50:29:
Hi Lynn,
I hope you don’t mind me asking you a tax question for a friend of mine. His father made $15,000 in improvements to his son’s rental house; on the same property as the son home. The father gave the son $10,000 in cash gift in 1998. Does the son have income for the value of improvements to the home or is this a gift that the father would have to pay gift taxes on in 1998? Your help appreciated.
Steve Heller
Tax Questions - Posted by N. Jerns
Posted by N. Jerns on April 09, 1999 at 13:42:29:
If I structure a deal where the seller carries a 5 yr note at 8% annually but payments are made on principle only, the balloon plus interest would be due in 5 yrs. Can I take a deduction on this years interest expense even though I won’t actually pay the interest until either the loan matures or I pay it off?
Re: Tax Questions - Posted by JHyre in Ohio
Posted by JHyre in Ohio on April 12, 1999 at 15:35:46:
What propose a variant of a zero-coupon bond. The debt in question probably constitutes Original Issue Discount (“OID”). As such, the holder of the note must include formulaically-determined amounts in income each year even though no money is actually received. Similarly, the debtor gets formulaically-determined amounts as deductions each year. The OID rules are no fun- seek help.
John Hyre
Re: Tax Questions - Posted by Lynn M. Petrovich, CPA
Posted by Lynn M. Petrovich, CPA on April 09, 1999 at 15:29:35:
See code section 6109(h) of the Federal Tax Code.
see web site www.irs.ustreas.gov
Lenders receiving interest report same on form 1098