I this following question but I failed to mention the sellers of the property never lived the the primary dwelling residence for over twenty years, will this mess up the previous response to our tax-man's to push our tax plan to avoid capital gains taxes?
I sold 10 acres in February 2013, the remaining land on the deed is 12 acres. Daughter recommend using a local tax man (non-C.P.A.) who created this idea. He said we could create a partnership where I control 40% and my kids control 60%. I will be allowed to keep a property loan in my name for the next ten years, controlling all finances and borrow against the property.
Will this float past the IRS? The gain is $680,000 and with some creative cost-basis methods we got the property's gain down to $500,000. I like the idea of selling the property and keeping it at the same time. Will the IRS allow me to claim the full $500,000 tax exemption by selling 60% to my kids? The Tax-Man think's this is the best way to avoid taxes on my long-term home.
The "tax man" said to sell my residence on the property and carry all the paper of the note. Do you see any easily identifiable issues with selling the house and keeping my property (borrowing against the sold property to build a new house, and keeping a home equity loan in my name only.) and doing some accounting moves to avoid paying any taxes. I hate paying taxes and have not paid any in years, I don't want any penalties though, if I can have my cake and eat it too, is there anything wrong with the "tax man's" idea?
Can the IRS say I have not sold my property if I keep a 40% controlling interest in it but tell the IRS I sold it? Is there a method to keep my property and take advantage of the "One Time Capital Gain" exemption rule?
(Open to new answers for 7 days.)