Option Consideration

[Guest Guest_Sparetimeinvestor_*]

I have been collecting the full option consideration in which the tenant buyer has issued me a cashiers check for the full option payment. I then keep my portion and then write a check from my business account over to the seller for his portion of the option payment.

 

Ex. I collected a $7,000 option consideration in which I kept 2K and and the seller is received 5K.

 

Do I have to 1099 the seller or anything to show that I only kept 2K when looking at bank statements and such for the IRS. Or is it just a referral fee type of thing?

 

 

 

Kurt....

[Adam King (MI) 1]

Kurt,

Not a CPA here, but here's what we do. We simply make sure we have the checks come back from the bank and (of course) the bank statement to show where the money goes.

We basically do our taxes on what goes in and what goes out. We don't 1099 anyone.

Hope that helps,

Adam

[Kimberly 0]

Kurt,

 

Your Option and Assignment forms should show who got how much. The Option will show the total and the Assignment form will show how much you received. I'd think that would be sufficient, especially if you're doing as Adam said and keeping track of the checks and bank statements.

 

If I'm remembering correctly you aren't even required to 1099 an independent contractor unless you've paid them $10,000 or more that year.

 

Kim