Tax Filings Due Jan. 31

Published: Thu, 01/07/10

January 7, 2010..

The Paper Source Cash Flow Express

A Note Course Bonus Lesson

, it's a new year filled with new opportunities!

Do you know whether or not you must file a Form 1098 with the IRS and provide one to your borrowers?

In this Bonus Lesson you'll find out from estate and tax attorney Roger McClure. Roger is a long-time note and real estate investor in Northern Virginia (D.C. area) and a published author (Prentice-Hall) on real estate syndication. He was the attorney for The Paper Source, Inc., and also my personal attorney for the many years I lived in the Washington area working in Congress.

This Bonus Lesson is made possible by Ron Stone, owner of the website www.sell-my-note.biz -- which he is selling. See below.

Cheers,

Bill

W. J. Mencarow
President, The Paper Source, Inc.

www.PaperSourceOnline.com
www.cashflows.org

P.S. "Where can I sell my note?" "Do you know of a company that provides servicing?"
"Can you recommend a mentor?"

I get these questions frequently, and I turn to THE PAPER SOURCE REGISTRY OF NOTE INVESTORS to give my recommendations.

The 2010 PAPER SOURCE REGISTRY OF NOTE INVESTORS print edition will be sent to all PAPER SOURCE JOURNAL subscribers with the March issue. This is the 20th annual edition and it is the standard reference the industry uses to locate note investors, mentors and companies with products and services.

You'll also appear in the Internet Edition of the Registry with live links to your website and e-mail. You also have the opportunity to feature your company with your logo (also linked to your website), text enhancements, even PHOTOS to make your company stand out.

You can get into the Internet e-Registry any time, but the Print Edition deadline is FEBRUARY 15. When you are in the Print Edition you are automatically in the e-Registry.

If your firm buys notes with sources of funds unavailable to note brokers or offers a product or service to the industry you should be in the Registry -- your competition probably is!

E-mail me for information about being in the 2010 Registry: wjm@PaperSourceOnline.com Please provide your phone number.

*********************************************************************************
(If you would like to see your message here, sent to 27,000 people who have asked to receive information on notes/cash flows, go to www.PaperSourceOnline.com)

Are You Tired of:

Buying supposedly "Exclusive Leads"?

Spending endless hours at the courthouse?

Making Google© rich with your PPC money?

How would you like to have note sellers call you daily from all over the country with notes they are itching to SELL?

How would you like to go from a wannabe note broker or investor to a broker/investor powerhouse almost instantaneously?

My name is Ron Stone and I own a notes website (1 of 5) - http://www.sell-my-note.biz which I am selling. I built it from scratch. It took almost a year to get where it is on the search engine results. It is currently #3 on Page 1 of Google, #1 & #2 on Page 1 of Yahoo and # 2 on Page 1 of Bing for the term "sell my note" (no quotes necessary) with over 130 million competing pages. Notice the word SELL. Note holders coming to my site want to SELL THEIR NOTE!

Even better, THIS SITE CAN BE YOURS. I have decided to go in a different direction in my business and will be auctioning off this website VERY SOON. If you would like to be a player in the Note Brokering or Note buying business in a heartbeat, give me a call. I will be glad to provide you with traffic statistics. The minimum price for this website, including its Blog is $15,000. Think how few notes you would have to close to pay for this great website.

Don't be left behind. Make 2010 your break out year in the note business. Call today!

Ron Stone
U.S. Funding Solutions, Inc.
gronstone@verizon.net

828-689-4683

In This Issue

In This Issue:

Where Are Your 1098's?

Featured Products

NEW Home Study Course On Note Brokering -- 20 CDs!
Want To Find More Notes?

Where Are Your 1098s?

by Roger J. McClure, J.D.

Do you know whether or not you must file a Form 1098 with the IRS and provide one to your borrowers?

There are general rules to follow:

1) If you or your company, corporation, partnership or trust are in a trade or business and you receive mortgage interest

incident to your trade or business, and you or the entity receive interest payments from individuals and any individual paid you
more than $600 in interest in a calendar year, you must provide a Form 1098 by January 31 of each year to each individual who paid you at least $600 of mortgage interest in the last year. You list on the 1098 all of the interest received and send a copy to the IRS. You must also file Form 1098 and 1096 with the IRS by February 28.

    2) If you or your entity meet the qualifications under #1, you do not have to report to the IRS or the payor any interest paid
by a corporation, trust, company, estate or other entity which is not an individual.

    3) If you meet the qualifications under #1, you only report individuals whose mortgage interest payments generate more than $600 per mortgage in one calendar year.

    4) If you or your entity are not in a trade or business or your receipt of mortgage interest is not incident to a trade or business, then you do not have to send in Form 1098 to the IRS or your borrowers.

Example 1. You buy, hold and sell mortgages from time to time. You usually only have about three or four mortgages during the year which you hold in your name. You report your interest income on Schedule B and your interest and other expenses on Schedule A. This amount of activity does not rise to a trade or business but is an investment activity.

Example 2. You formed a corporation, licensed it as a mortgage lender, and set up an office in your home. Your spouse works and the lending corporation is your main source of income. You make about 100 loans a year and borrow a large part of your capital. This constitutes being in a trade or business and you must provide 1098s to your qualifying non-corporate borrowers and to the IRS.

Example 3. The same facts as Example 2, but five of the mortgages you hold each paid less than $600 in mortgage interest. You report none of the payors who paid less than $600 of mortgage interest in the last calendar year.

Example 4. Your corporation's pension fund buys and holds to maturity about 10 mortgages and continues to buy more as the pension fund grows. The pension fund is a passive investor, not intending to be in a trade or business. The pension fund provides no 1098s to anyone.

Example 5. You have a small loan company which you conduct as a side business from your regular job. It is not incorporated and you report its income and expenses on a Schedule C. You buy, sell or hold about 10 to 15 mortgages a year. You want to be viewed by the IRS as in a trade or business so that you can deduct the expenses of conducting your loan business on a Schedule C. Because you want to be treated for all purposes as conducting a trade or business, you provide 1098s to your qualifying non-corporate borrowers and the IRS.

    The critical elements in mortgage interest reporting are that you or your entity must be engaged in a trade or business and your receipt of mortgage interest is incident to that trade or business. You or your entity do not have to be in the trade or
business of mortgage lending. The loan servicer who has sufficient information to report mort*gage interest subject to the Section 6050H reporting requirement must report it.

If you do not make the required 1098 reports, you can be subject to a fine of $50 per form up to $100,000. In general, if you cannot determine whether you are or are not receiving mortgage interest incident to a trade or business, it is best to file the reports to avoid the penalties and to add further support to your claim for the deduction of your lending business
expenses.

For more information, go to www.irs.gov and get Instructions for Form 1098.

Roger J. McClure is a note and real estate investor and a practicing lawyer with over 30 years of experience. He maintains a business, estate and charitable planning law practice based in Virginia. His undergraduate degree is in international Studies and he holds a Masters Degree in Political Science from Northwestern University and a Juris Doctorate with honors from the Ohio State University Law School.

Roger has conducted civil and criminal trials in local courts, represented creditors in bankruptcy proceedings, and litigated antitrust and trade regulation cases involving the largest corporations in America in federal regulatory proceedings. He served ten years in the Virginia legislature (House of Delegates), has been a radio talk show host, received a bronze star for service in Vietnam, and has written and published several books and numerous articles.

He is a sought-after speaker nationally and has been a featured speaker at many PAPER SOURCE seminars and conventions.

Contact him at www.wealthcounsellors.com
email roger@wealthcounsellors.com
Phone: 571-633-0330

Did you like this article? You can get many more like it, plus the latest news of the note business, new note investors, new laws, court decisions, etc. affecting the business, interviews with the experts and much more every month in THE PAPER SOURCE JOURNAL.

With your subscription you also get the PAPER SOURCE REGISTRY OF NOTE INVESTORS, plus the E-Registry on the Internet, the most accurate compilation available of true note buyers (not brokers) and what they buy.

We've been doing this for over 20 years, and we know who the real players are.

For more information: www.PaperSourceOnline.com

"The Paper Source Journal has been a very valuable source of information for me. I've been a subscriber for most of your years of publication." --Nick Buschur, Grants Pass, Oregon, #1 Broker for the largest note investment firm in the world for an unprecedented 3 years in a row, est. annual volume $15.8 million.

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