taxbrewster Posted August 18, 2017 Report Share Posted August 18, 2017 Looking for some help here. I have a client who is looking at a syndicated real estate investment and is being told the following - just trying to make sense of it. It is somewhat new to me. Investment $50K / Minimum ROI over 2 years is 25% / Hopeful return of $12,500 They would report the income and return on investment on a 1099-Misc Box 3 - stating that it would only be taxed at 15%. Resulting in a tax liability of $1875. How is this being treated as capital gains and not ordinary income (35% tax bracket)? Then how would this be reported in ATX because everything I run has it getting hit at his normal rate not a capital gain rate. I have read so much tonight on the subject I think I am confusing myself. Any suggestions would be helpful. Thanks! Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted August 18, 2017 Report Share Posted August 18, 2017 Tell him.... 2 Quote Link to comment Share on other sites More sharing options...
ILLMAS Posted August 18, 2017 Report Share Posted August 18, 2017 More likely the investors will be receiving a K-1 with amounts on interest and rental income lines. 1 Quote Link to comment Share on other sites More sharing options...
Roberts Posted August 18, 2017 Report Share Posted August 18, 2017 When it says ROI of 25%, I think you should probably read that as "we hope to return 25% of your money". I've never had an investor like that receive a 1099m. As Illmas says - K1 is the appropriate form. 2 Quote Link to comment Share on other sites More sharing options...
taxbrewster Posted August 18, 2017 Author Report Share Posted August 18, 2017 Thanks for the comments, agreed, I have red flags going up everywhere as well. My first thought as well was it should be issued as a K1...In the latest development the company said they had "flexibility to report the income on a 1099 of his choice" My answer was say have a nice day and walk away... 2 Quote Link to comment Share on other sites More sharing options...
Catherine Posted August 20, 2017 Report Share Posted August 20, 2017 Danger Will Robinson! 1 Quote Link to comment Share on other sites More sharing options...
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