rental property not really his

[schirallicpa]

Client has "always" had rental property and taken income/ expense on Schedule E. Come to find out, his property has always been held jointly with his daughter. She has never showed any Sch E.

Now - he wants to transfer the real property to his daughter. Lawyer was supposed to take care of this past summer. Not recorded yet at the county office. No money exchange took place. If on paper its a done deal, does it matter if it is not recorded in county office yet?

But client (and daughter)still wants to keep the income and expense on his return and pretend nothing happened.

Any suggestions as to how to handle this?

I have another situation where a client owns commercial rental property and she wants to keep ownership of the property and give income and expense to her brother-in-law who manages it. Kind of the same situation. Not sure of best way to work this out.

Any suggestions would be great!

[rfassett]

The IRS frowns heavily upon income and/or expense assigning.