1099-MISC

[Deb & Bill]

Anyone hear about point brokers giving owners 1099-MISC for tax purposes? So you can declare your income from renting out your points.

 

[supersnoop]

I imagine any domestic broker is legally required to file a 1099 for any transaction over $600, just the same as any property management company. Note that the largest broker is not based in the USA.

 

[CarolMN]

Assumed they have always done so. Not a CPA, but if they don't issue them, IRS probably assumes all the $$ they collect are taxable instead of just the $3 or so they keep.

 

[pmaurer74]

are the closing costs from the purchase of a DVC tax deductible?

 

[Dean]

Anyone hear about point brokers giving owners 1099-MISC for tax purposes? So you can declare your income from renting out your points.

They should be, the income is reportable either way. The 2 free weeks such as a vacation home really doesn't apply to timeshares.

are the closing costs from the purchase of a DVC tax deductible?

It'd reduce the cost basis if you sold but I don't think it'd be deductible. The only way I could see it might be in some way would be if one bought truly as an investment and didn't use it personally.

 

[GaryDis]

Anyone hear about point brokers giving owners 1099-MISC for tax purposes? So you can declare your income from renting out your points.

It's so the IRS can match things up. You don't need the 1099-MISC to the declare the income, and you're required to declare the income whether or not you get the 1099. Even if it's below the 1099 trigger amount ($600), or if you're renting directly to a private party (who has no obligation to send 1099s), it's still taxable income to you.

are the closing costs from the purchase of a DVC tax deductible?

I don't know what closing costs are typical on a DVC purchase, but in general, closing costs fall into one of three categories:

1. Deductible. If they'd be deductible outside of closing, their deductible at closing. Example: Many banks require interest from the date of closing to the end of the month to be paid at closing (after which, interest is paid in arrears). If you qualify to deduct interest on the DVC purchase (and not everyone will), then this would be included.
2. Basis adjustment: Costs that are clearly and traditionally associated as a cost of sale. Example: recording the deed, legal fees, etc. I wouldn't expect a buyer's broker for DVC, but if a buyer pays a buyer's broker directly at closing for a real estate purchase, that would be a basis adjustment.
3. No tax impact: Things associated with other aspects of the transaction. Prepaid escrow amounts are common. Some costs associated with getting financing fall here. If you're paying some of your own management fees in advance, they'd fall into this category. But if you're paying management fees that are obligations of the seller, then that's part of the purchase price and would be in the basis adjustment category.

 

[DVCcurious]

Let's say someone rented some points a couple years ago. And that person didn't get a 1099 from the rental company. So that person didn't even think about adding the rental money to their income taxes. Would that person be in trouble with the IRS? I'm asking for a friend.

 

[mickeyman]

Sorry IRS you get enough of my money. If I happen to rent out my point I will not report it.

 

[GaryDis]

Let's say someone rented some points a couple years ago. And that person didn't get a 1099 from the rental company. So that person didn't even think about adding the rental money to their income taxes. Would that person be in trouble with the IRS? I'm asking for a friend.

For a question like this, my only answer would be:

1. I don't make odds on the the chance of the IRS auditing you or finding this.
2. Here's what the tax, penalty, and interest would be (roughly) if we filed an amendment now.
3. Here's what my fee would be for preparing an amendment.

Some tax preparers would refuse to serve a client who didn't fix prior year mistakes. But we're not required to, and I'd probably accept such a client if the numbers were small compared to the prep fee, which is likely. (Our obligation upon finding an error on a previously filed return that we didn't prepare is #2 above, plus an explanation of how the penalties and interest would grow if you don't amend now.) However, depreciation could complicate matters, and I'm not sufficiently familiar with this sort of timeshare arrangement to comment on how depreciation would work, if it even does.

 

[supersnoop]

Let's say someone rented some points a couple years ago. And that person didn't get a 1099 from the rental company. So that person didn't even think about adding the rental money to their income taxes. Would that person be in trouble with the IRS? I'm asking for a friend.

Sorry IRS you get enough of my money. If I happen to rent out my point I will not report it.

If the IRS initiates an audit, they can look back 3 years. If they find income was understated by more than 25%, they can go back six years. And, if they find evidence of fraud (if you know you should report the income and don't, that's fraud), then they can investigate all your income from the beginning of time.

 

[Dean]

Let's say someone rented some points a couple years ago. And that person didn't get a 1099 from the rental company. So that person didn't even think about adding the rental money to their income taxes. Would that person be in trouble with the IRS? I'm asking for a friend.

In this situation I wouldn't worry about it. Going back and doing an amended return is likely more risk than not having reported it.

Sorry IRS you get enough of my money. If I happen to rent out my point I will not report it.

Many don't but it is a legal requirement. And there are those that will report people to the powers that be related to internet posts (RCI renting for example).