Discussion:Homebuyers credit and related parties?
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| {{ForumReplyPost|UserID=TAXBILLY|Date=12 June 2009|Text=If Susan files a separate return the credit is limited to the lower of 10% or $4000. | {{ForumReplyPost|UserID=TAXBILLY|Date=12 June 2009|Text=If Susan files a separate return the credit is limited to the lower of 10% or $4000. | ||
| taxbilly}} | taxbilly}} | ||
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| + | {{ForumReplyPost|UserID=LJACPA|Date=22 June 2009|Text=I'm almost hesitant to bring this discussion back up as it is so confusing and seems kind of contradictory (still am not sure if they file a separate return if each would qualify? Seems like only she would...). Regardless, I know that related party as it relates to this credit includes an individual and a corporation which is 50+% owned by that individual. But, that's "direct or indirect" ownership, so does that mean that a parent who owns an S corporation 100% and the corporation owns a home and sells to the son of the 100% shareholder, the son would not qualify? Is that clear as mud? I don't think the son would qualify because he indirectly owns (267(c)(2)) - maybe???}} | ||
Revision as of 15:42, 22 June 2009
Discussion Forum Index --> Basic Tax Questions --> Homebuyers credit and related parties?
Discussion Forum Index --> Tax Questions --> Homebuyers credit and related parties?
Scottycoyote (talk|edits) said: | 9 June 2009 |
| Situation.....a client got married on april 1 2009 and closed on a home bought from her new spouse's grandparents on april 20, 2009. Shes been told she still qualifies for the homebuyer credit, but best as i can see (irc267), her spouse's grandparents become related parties to her thru marriage so she doesnt qualify. The only way i see how that could have worked would be if they had closed on the house BEFORE they married, then she would have qualified (he still wouldnt because they are his grandparents). Am i looking at this wrong? Once you marry, you become one unit and its your brothers/sisters and lineal decendants that become your family (related parties). | |
| 9 June 2009 | |
| Just to clarify, brothers and sisters are not related parties for purposes of the Sec. 36 credit.
I believe that the credit is out of the question if they file a joint return. However, reading Sec. 36, it would seem that the husband would qualify for a $4,000 credit since he is not related to his spouse's grandparents. | |
Scottycoyote (talk|edits) said: | 10 June 2009 |
| where did you find that riley? i was reading some faq's and it gave a specific example of a brother selling a house to his brother and it not qualifying b/c they are related parties.
i thought once a couple gets married, his grandparents are her grandparents for related party rules, so if they bought the house AFTER they marry, looks like neither would qualify for the credit due to related party. If they had remained unmarried and bought it, or bought it before they married, then i believe she could receive the entire $8k credit (the house was his grandparents, not hers)? | |
RoyDaleOne (talk|edits) said: | 10 June 2009 |
Sec. 36(c)(5) RELATED PERSONS.
A person shall be treated as related to another person if the
relationship between such persons would result in the disallowance of
losses under section 267 or 707(b) (but, in applying section 267(b)
and (c) for purposes of this section, paragraph (4) of section 267(c)
shall be treated as providing that the family of an individual shall
include only his spouse, ancestors, and lineal descendants).
http://www.andrewmitchel.com/html/topic.html See Section 267 chart. Section 267(c)(4) (4) The family of an individual shall include only his brothers and sisters (whether by the whole or half blood), spouse, ancestors, and
lineal descendants; and
| |
Scottycoyote (talk|edits) said: | 10 June 2009 |
| thanks for the responses guys, i dont know if its just unclear or if im just thick,ive read267 and 707 and done numerous searches but I still cant find the answer to this question......
each person has their family (brothers, sisters, lineal decendants). When one person marries another person, are the families comingled in regards to related party rules. In other word......Tom has grandparents.....Susan has grandparents.......tom marries susan. Now is toms grandparents related parties to susan and vice versa.....or not. | |
RoyDaleOne (talk|edits) said: | 10 June 2009 |
| Is Tom's grandparents' relationship to Susan in the form of, spouse, lineal ancestor, or a lineal descendant? Or the inverse of Susan's grandparents to Tom? Lineal means in a straight line. If the answer is no, then except at family parties, weddings, and other get to gathers there is no commingling.
Well, you opened the door as they say. | |
Scottycoyote (talk|edits) said: | 10 June 2009 |
| ok thanks roy, thats what i wanted to know :) | |
| 11 June 2009 | |
| Scotty, an in-law is not a related party. See Stern v Commissioner, 46 AFTR 584 (215 F.2d 701), (CA3), 09/17/1954. | |
| 2009-06-11 | |
| So if in-law are not a related party and susan buy the home from Tom's grandparents and both qualify otherwise then Susan can qualify for the $8000. credit??? | |
| 12 June 2009 | |
| If Susan files a separate return the credit is limited to the lower of 10% or $4000.
taxbilly | |
| 22 June 2009 | |
| I'm almost hesitant to bring this discussion back up as it is so confusing and seems kind of contradictory (still am not sure if they file a separate return if each would qualify? Seems like only she would...). Regardless, I know that related party as it relates to this credit includes an individual and a corporation which is 50+% owned by that individual. But, that's "direct or indirect" ownership, so does that mean that a parent who owns an S corporation 100% and the corporation owns a home and sells to the son of the 100% shareholder, the son would not qualify? Is that clear as mud? I don't think the son would qualify because he indirectly owns (267(c)(2)) - maybe??? | |
