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News
Of The Note/Cash Flow Business For Brokers & Investors |
"You can make one loan, and if it was originated or acquired
in the course of one of your trade or businesses, you are
subject to Section 6050H. If you do not make the required
1098 reports you can be subject to a fine of $50 per form
up to $100,000." -- Roger J. McClure, J.D.
Hello again ,
In this issue Roger J. McClure, a well-known attorney who is also a note and real estate investor, tells you whether or not you need to file 1098s by Jan. 31. It's critical information for note and real estate investors, lenders and others who receive payments. Roger wrote this article especially for THE PAPER SOURCE JOURNAL, our paid subscription publication. I thought it was important enough to send to you in case you aren't a subscriber...yet!
Cheers,
P.S. There's another deadline coming up fast! I hope you will join me and note experts from around the country for the first-ever Paper Source Note Symposium: Finding Notes & Marketing Your Cash Flow Business, April 28 - May 1 in Las Vegas. If you
register now for the super early-bird discount, you'll save $300.00
(just $695.00). Plus, you'll get ONE-ON-ONE consulting with the
teachers!
Registration includes a free new subscription or renewal to
THE PAPER SOURCE JOURNAL ($79.00 value) and THE PAPER SOURCE REGISTRY OF
NOTE INVESTORS. See the attached flyer and visit www.PaperSourceSeminars.com for more details and to register.
REGISTER NOW -- THE EARLY REGISTRATION DISCOUNT EXPIRES THIS TUESDAY, FEB. 1.
IMPORTANT JAN. 31 DEADLINE
FOR NOTE INVESTORS & LENDERS
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? These are general rules under Section 6050H of the tax code:
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 Feb. 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 under Section 6050H. Check to determine whether these payments fall under any other reporting requirement.
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 have a professional practice or other business unrelated to real estate. You make only one loan during the year. This amount of activity does not rise to a trade or business under Section 6050H.
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. 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. To have to report, you or your entity does not have to be in the trade or business of mortgage lending. You can make one loan, and if it was originated or acquired in the course of one of your trade or businesses, you are subject to Section 6050H. The loan servicer who has sufficient information to report mortgage 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.
Starting in 2011, operators of real estate will be required to send 1099 statements to vendors and the IRS for amounts over $600. Starting in 2012, under the health care law passed last year, all businesses will have to file information returns on anyone they paid more than $600 to during the year. Congressional revenue estimates count on this quadrupled increase in the reporting burden to bring in more tax revenue.
Roger McClure is a practicing attorney with over thirty-five years of experience. He maintains a business, estate and charitable planning law practice based in Virginia. 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.
or call 1-800-542-2270.
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Where do you find the major cash flow funding sources? In THE PAPER SOURCE REGISTRY OF
NOTE INVESTORS. http://papersourceonline.com/registry-of-investors/how-to-get-in/
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How The SAFE Act Affects Seller Carryback Notes:
Strategies For Note and Real Estate Brokers & Investors
Bill Mencarow has published his analysis of the SAFE Act: How The SAFE Act Affects Seller Carryback Notes: Strategies For Note and Real Estate Brokers & Investors. It addresses questions such as:
* Do you need a license?
* How does the SAFE Act affect you if you want to buy, create or broker seller carryback notes?
* How many seller finance deals can you do?
* Can you legally get around the SAFE Act?
* Plus solutions to many of the questions we have all been asking ourselves!
* And many more ideas you may not have thought about ...
7 bonus documents are included:
- SAFE Act FAQs
- Text of the Federal SAFE Act (PL 110-289)
- HUD Model SAFE Act for States
- HUD Commentary on Model SAFE Act
- HUD Report to Congress On SAFE Act
- Proposed SAFE Act Rule
- Congressional Letter To Conferees
It's available for just $9.95 at http://papersourceonline.com/safeact/
Confidence For The New Year
January is the time of the year when many of us make new year's resolutions to change things or better ourselves. As a note broker or buyer you might make your mind up to truly and honestly give your note business the focus, desire and effort that it deserves to make it successful so that
you can do the things you've always wanted to do. Looking ahead to the next year you have yet another chance to transform your life into what you've always wanted it to be.
So, what should you do? What kind of marketing should you start, add or subtract to your note business to make it better? How can you begin the process of putting your energy into your note business and continue with what you need to do to reach your goals? In order to be persistent with your marketing efforts you first need to develop confidence. Developing confidence in yourself, confidence in the business and confidence in your plan may take some time but it is well worth it.
Even after being in the business now for 20 years, I need to keep my confidence up as well, so I will share with you one of the things I do. Your instructions are to write down your realistic and achievable note business goals and print it out. Then you will tape it to your bathroom door. Every morning immediately when you wake up and every evening right before you go to bed you will read this aloud to yourself until you develop sufficient self confidence to attain whatever it is you desire, (success in the note business).
Nothing comes easy. You need to work towards your end goals with tomorrow, and what it may bring, always in mind. Starting with developing your self confidence may be the first step and what better time to start than the beginning of the year -- TWITA! (That's What I'm Talking About!)
Jeff Armstrong of Armstrong Capital has been a note broker and investor specializing in the seller-held note industry since 1991. He can be reached at 818-865-2322 or info@armstrongcapital.com. For more information on how he can help you with your note business or to request a quote visit www.armstrongcapital.com
Jeff will be teaching his methods of finding notes and marketing his cash flow business at the first-ever Paper Source Note Symposium: Finding Notes & Marketing Your Cash Flow Business April 28 - May 1 in Las Vegas. Other teachers, all veteran note experts, will be Lisa Moren-Bromma, Kent Anderson, Dave Krunic, Simon White and Bill Mencarow -- There has never been an event like it!
If you
register now for the super early-bird discount, you'll save $300.00
(just $695.00). Plus, you'll get ONE-ON-ONE consulting with the
teachers, including Jeff Armstrong! Registration includes a free new subscription or renewal to
THE PAPER SOURCE JOURNAL ($79.00 value) and THE PAPER SOURCE REGISTRY OF
NOTE INVESTORS. See the attached flyer and visit www.PaperSourceSeminars.com for more details and to register.
REGISTER NOW -- THE EARLY REGISTRATION DISCOUNT EXPIRES THIS TUESDAY, FEB. 1.
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You can send a Bible to someone who desperately wants one!
Visit Bibles Unbound, a ministry of Voice of the Martyrs, and learn how you can become a Bible Mailing Missionary: www.BiblesUnbound.com
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| In This Issue |
IN THIS ISSUE:
IMPORTANT JAN. 31 DEADLINE FOR NOTE INVESTORS & LENDERS
By Roger J. McClure, J.D.
CONFIDENCE FOR THE
NEW YEAR
EARLY REGISTRATION DISCOUNT EXPIRES THIS TUESDAY, FEB. 1!
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