How to report transaction

[ILLMAS]

Dom and Dommer are twin brothers, Dom bought a delivery route 10yrs ago for 200K (was never amortized), since Dom did not have the 200K, Dommer gave him part of the money after he took out a loan on his house. Throughout the years the one single route became three, Dom was in charge of route 1, Dommer route 2 and Harry route 3, Harry asked Dom and Dommer if they would sell the third route to him, and they did, they sold it for 120K, for the past years Dom reports 100% of the revenue and expenses and then gives a 1099 to Dommer and Harry for their route. Dom and Dommer did not consult with their attorney or accountant and took it upon themselves to make the sale. Dom received a payment from Harry for the 120K, Dom kept 50K and gave 70K to Dommer, now here is my question, since Dom has always reported 100% of the revenue and expenses, does Dom need to report 100% sale his tax return or he reports 41% and Dommer 59%? Also how would the 70K to reported to Dommer, expense of sale?

Thanks

MAS

[mcb39]

Do they have a formal Partnership, or what? I would think that Dom would issue a 1099 Misc to Dommer for 70K. If they are both Sch C, Dommer can then report the expenses of the sale on his Sch C.

My first reaction to this post was "HUH?"

[Catherine]

A chart, with circles and arrows and a paragraph explaining each step. That's what you need to tease this one apart. I'm with mcb39 on the "Huh?!?!" reaction.

[ILLMAS]

Lol sorry for the huh, I didn't even know how to put in words, TP has a mess.

[kcjenkins]

My first thought was that they had an oral partnership, but after thinking about it, I've changed my mind. Because the most objective measurement of 'intent' is how they have filed their returns. And this is not just one return, it's many years worth.

[Catherine]

Here's the proper step-by-step procedure for dealing with this one:

Acquire a brick.

Give said brick to client, and recommend frequent application to head, until, say, August or so.

Acquire a nice bottle of your preferred adult beverage.

Hide under your desk and sip at the above beverage until the client and his brick are obliterated from your memory.

Try again in August! Make the client bring you iced tea and cookies before you will speak to him.

[kcjenkins]

ROTFLMAO

[Richcpaman]

MAS: Lets break this down: My Edits

Dom bought a delivery route 10yrs ago for 200K (was never amortized), That makes Dom the Owner/Pres/Etc.

Since Dom did not have the 200K, Dommer (Lender) gave him part of the money (How Much?) after he took out a loan on his house. (he could have sold a horse too...LOL)

Throughout the years the one single route became three, Dom was in charge of route 1, Dommer route 2 and Harry route 3, (Still at this point all Dom's)

Harry asked Dom and Dommer if they would sell the third route to him, and they did, (A deal between Dom and Harry) they Dom sold it for 120K, for the past years Dom reports 100% of the revenue and expenses and then gives a 1099 to Dommer and Harry for their route (Sounds like a Sch C with subcontractors).

Dom and Dommer did not consult with their attorney or accountant and took it upon themselves to make the sale. (Never heard this before!)

Dom received a payment from Harry for the 120K. Dom kept 50K and gave 70K to Dommer (Repayment of the loan, no interest, etc.),

Since Dom has always reported 100% of the revenue and expenses, does Dom need to report 100% sale his tax return (Yes) or he reports 41% and Dommer 59% (No)? Also how would the 70K (Loan Repayment) to reported to Dommer, expense of sale?

Does that make better sense? Stick to the facts.

Rich

[ILLMAS]

MAS: Lets break this down: My Edits

Dom bought a delivery route 10yrs ago for 200K (was never amortized), That makes Dom the Owner/Pres/Etc.

Since Dom did not have the 200K, Dommer (Lender) gave him part of the money (How Much?) after he took out a loan on his house. (he could have sold a horse too...LOL)

Throughout the years the one single route became three, Dom was in charge of route 1, Dommer route 2 and Harry route 3, (Still at this point all Dom's)

Harry asked Dom and Dommer if they would sell the third route to him, and they did, (A deal between Dom and Harry) they Dom sold it for 120K, for the past years Dom reports 100% of the revenue and expenses and then gives a 1099 to Dommer and Harry for their route (Sounds like a Sch C with subcontractors).

Dom and Dommer did not consult with their attorney or accountant and took it upon themselves to make the sale. (Never heard this before!)

Dom received a payment from Harry for the 120K. Dom kept 50K and gave 70K to Dommer (Repayment of the loan, no interest, etc.),

Since Dom has always reported 100% of the revenue and expenses, does Dom need to report 100% sale his tax return (Yes) or he reports 41% and Dommer 59% (No)? Also how would the 70K (Loan Repayment) to reported to Dommer, expense of sale?

Does that make better sense? Stick to the facts.

Rich

Thanks Rich, this TP has become someone else's problem as of yesterday.