- So let me ask you all again, do you all “REALLY” know why you are talking about here?
- Yes.
- Have any of you actually been through this or are you just taking an academic approach to this?
- In my case, academic.
The answers above are generally correct. Whether they apply to your case, depends on the details (how does the contract account for the $25K) and whether, upon audit, you can convince the IRS that you didn’t receive the $200K 1099-S amount.
A gift of equity is fairly common. “Because a gift of equity reduces the sale price of a home (aka the cost basis), it increases the chances that the BUYER (emphasis added) will end up paying those capital gains taxes”. Reference: https://www.quickenloans.com/learn/gift-of-equity
