Question about the IRS and large bank deposits.

DeathEatsaCracker · Dec 12, 2009

My girlfriend and I recently split up and she's buying out the equity in my half of the house we purchased together.

The total is going to be $30k. Tonight, she wrote me a check for $15,000 that I want to deposit. I know that if I deposit that amount in cash, the bank will notify the IRS. Does the same apply to a check?

Dante · Dec 12, 2009

even if they do what is the problem? that is legit money you will need to pay taxes on that anyway since its this year it counts on your 2009 taxes ... you have to claim that profit or risk fines and stuff... im not a tax expert but I think you need to claim it

DeathEatsaCracker · Dec 12, 2009

If you sell a home, the proceeds are not taxable. If she is buying me out, this shouldn't be taxable either.....right?

ninetrain · Dec 12, 2009

Yes, same applies to a check, ACH and wire.

I believe some banks even report to IRS if large sums even if under $9000 are continuously deposited in a one month period.

DeathEatsaCracker · Dec 12, 2009

Shit.

Dante · Dec 12, 2009

Death Eats a Cracker said:
If you sell a home, the proceeds are not taxable. If she is buying me out, this shouldn't be taxable either.....right?

not sure your not married to her that may be an issue to consider to ... check with a tax guy

Dante · Dec 12, 2009

found this ..looks like it goes on your taxes either way, maybe you pay nothing on it though

If you sold your main home and made a profit, you may be able to exclude that profit from your taxable income. Here's how it works.

$250,000 Exclusion on the Sale of a Main Home
Individuals can exclude up to $250,000 in profit from the sale of a main home (or $500,000 for a married couple) as long as you have owned the home and lived in the home for a minimum of two years. Those two years do not need to be consecutive. In the 5 years prior to the sale of the house, you need to have lived in the house for at least 24 months in that 5-year period. In other words, the home must have been your principal residence

Reporting the Gain on the Sale of Your Home
Gain on the sale of your home is reported on Schedule D as a capital gain. If you owned your home for one year or less, the gain is reported as a short-term capital gain. If your owned your home for more than one year, the gain is reported as a long-term capital gain.

OAKAS · Dec 12, 2009

Hey Death, here is what you do.

This same thing happened to me.

Just have her write five $3000 checks to you.

Cash them one at a time over 2 or 3 months.

DeathEatsaCracker · Dec 12, 2009

OAKAS said:
Hey Death, here is what you do.

This same thing happened to me.

Just have her write five $3000 checks to you.

Cash them one at a time over 2 or 3 months.

It would have to be ten checks for the entire amount, but spread out over several months sounds like it could work.

Willie99 · Dec 12, 2009

Death Eats a Cracker said:
My girlfriend and I recently split up and she's buying out the equity in my half of the house we purchased together.

The total is going to be $30k. Tonight, she wrote me a check for $15,000 that I want to deposit. I know that if I deposit that amount in cash, the bank will notify the IRS. Does the same apply to a check?

There is no problem if you deposit a check for 15k, and it's not a reportable event either.

Even if it was a reportable transaction, that's not a problem if you have a good explanation. It's when you're trying to hide income (cash business, drugs, gambling) that it becomes a problem.

The sale of your residence is tax free if the property was your residence for any 2 of the preceding 5 years and your "gain from the sale" is less than $ 250,000

It doesn't appear to me that you have anything to be concerned with.

PS: if for some reason the property does not qualify as your residence as defined above, the only money you would be taxed on is the gain you realized.

thus if the house cost 150k, and you sold your half for 75k or less, there are still no tax consequences. (I'm assuming she assumed the mortgage in my example)

DeathEatsaCracker · Dec 12, 2009

~whew~

Yes, she did assume the loan. Thanks a bunch, Willie. I feel much better.

jeckll · Dec 12, 2009

I don't think you should be taking tax advice from TheRX. No offense to the posters above, but ask a tax expert. Not worth having the IRS up your ass.

DeathEatsaCracker · Dec 12, 2009

Willie99 is a tax expert. I PMed him specifically and ask for his input.

djmatt · Dec 12, 2009

I was in real estate. You should be fine, but make sure to mention it come time to file to your buddy the advisor

barman · Dec 12, 2009

Death Eats a Cracker said:
Willie99 is a tax expert. I PMed him specifically and ask for his input.

Echo of the above post.

For anyone who might still doubt, "willie99" has professionally prepared my past two federal tax returns and operates a longstanding tax accounting service in Connecticut.

bigbet1234 · Dec 13, 2009

That there is called "structuring" bad, bad idea.

OAKAS said:
Hey Death, here is what you do.

This same thing happened to me.

Just have her write five $3000 checks to you.

Cash them one at a time over 2 or 3 months.

DeathEatsaCracker · Dec 13, 2009

barman said:
Echo of the above post.

For anyone who might still doubt, "willie99" has professionally prepared my past two federal tax returns and operates a longstanding tax accounting service in Connecticut.

I'm going to need an accountant for calendar year 2010. Despite the fact that he's a dirty, conniving Rightie, I would say that's the exact kind of person you want when figuring out how to squeeze out every last deduction.

What did you do, mail your shoebox of receipts to Connecticut?

barman · Dec 13, 2009

Death Eats a Cracker said:
I'm going to need an accountant for calendar year 2010. Despite the fact that he's a dirty, conniving Rightie, I would say that's the exact kind of person you want when figuring out how to squeeze out every last deduction.

What did you do, mail your shoebox of receipts to Connecticut?

heh

Fortunately, the specifics of our federal returns the past two years did not demand such precise detail, though I have information here that could be provided upon request by the IRS.

We took care of everything with a couple of 30 minute phone calls. The "claims" which I made that were used by W99 can all be supported by me if needs be. But the bottom line $$ were not sufficiently huge to justify packaging it all together.

Drop him a PM for contact details and I'm confident you fellas could work together just fine

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