Discussion:Real Estate Option Payments, Sale that falls through
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| Revision as of 16:07, 1 October 2006 DZCPA (Talk | contribs) (In 2006.) ← Previous diff |
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Revision as of 00:23, 2 October 2006
Discussion Forum Index --> Tax Questions --> Real Estate Option Payments, Sale that falls through
| 1 October 2006 | |
| I understand that option payments to purchase real estate is part of the sales price and recognized when the sale actually goes through. However, what if the sale fails? I understand that the option payments are includible as ordinary income.
Question: When are the option payments includible in income, the year when the scheduled sale fails, or the year (s) when the option payments were made? My client received payments during 2004, 2005 and was scheduled to close in 2006. thanks for your input. | |
Mtmckeecpa (talk|edits) said: | 1 October 2006 |
| Try Reg. 1.1234-1(b)
The year the option expires (lapses) or is exercised. Riley addressed in this post [Option_Payment_on_Sale_of_Primary_Home_-_when_taxable] | |
| 2 October 2006 | |
| If this is a rental property then the option payments are recognized as income as they are received, if they are non-refundable option payments. | |
