Margaret CPA in OH Posted April 9, 2008 Report Share Posted April 9, 2008 Some here may recall my client who was 'forced' to sell his house for a university expansion. He came to an agreement and must be out of the house by May 31. Meanwhile, the university gave him a check for $35,000 noted as earnest deposit toward purchase. While I haven't seen the actual contract (client is legally blind and can't find it at the moment), I think there is nothing to be done with this deposit for 2007. Any other thoughts? Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted April 9, 2008 Report Share Posted April 9, 2008 I think it depends on if he has full, unfettered access to the funds, and if he would have to repay them if the deal fell through. Is the deal complete? I think you need a completed transaction before you recognize income. I think you are on the right track. Tom Lodi, cA Quote Link to comment Share on other sites More sharing options...
Margaret CPA in OH Posted April 9, 2008 Author Report Share Posted April 9, 2008 He actually has invested most of the money and is using much to try to locate a new home. It was designed, I believe, to allow him to have down payment money and moving cash as well as paying for taxis, etc. to find a home. So he does have unfettered access but the deal, while not yet legally and technically complete, is not realistically going to fall through. The university has scheduled demolition this summer. They gave him an extra 30 days to vacate but no more delays are possible. I am still inclined to not recognize it until 2008. Thanks for your input. Quote Link to comment Share on other sites More sharing options...
Maribeth Posted April 10, 2008 Report Share Posted April 10, 2008 He actually has invested most of the money and is using much to try to locate a new home. It was designed, I believe, to allow him to have down payment money and moving cash as well as paying for taxis, etc. to find a home. So he does have unfettered access but the deal, while not yet legally and technically complete, is not realistically going to fall through. The university has scheduled demolition this summer. They gave him an extra 30 days to vacate but no more delays are possible. I am still inclined to not recognize it until 2008. Thanks for your input. Margaret, I have had one of these. It is not income until the deal closes. So look to 2008 for any gain recognition. Maribeth Quote Link to comment Share on other sites More sharing options...
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