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Landlord isn't reporting rental income on taxes, can he get in trouble?

Talk about declaring bankruptcy, the issues involved and it's suitability to your financial problems

Landlord isn't reporting rental income on taxes, can he get in trouble?

Postby duane70 » Wed Sep 12, 2012 9:59 am

Through a strange chain of events, I learned that the landlord has not been reporting rental income on his assets. On top of that, he declared bankruptcy a year or so ago and on the forms he didn't claim any rental income at all, despite renting out 3-4 houses! Can he get in trouble for this? He has over ten years of dodging taxes as well.
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Landlord isn't reporting rental income on taxes, can he get in trouble?

Postby crespin » Wed Sep 12, 2012 10:05 am

So he filed personal backruptcy and his LLC protected the rental income. The LLC owuld also be doing the taxes on that money. SO you really have no idea if he is paying taxes on it or not.
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Landlord isn't reporting rental income on taxes, can he get in trouble?

Postby daveed92 » Wed Sep 12, 2012 10:07 am

An individual can't file Chapter 11. That's a reorg plan for a corporation.

His BK filing does not indicate tax fraud. In fact, when an individual files BK, their tax returns are pretty closely scrutinized and there are other returns filed in addition to their individual income tax return.

Most landlords operate at a tax loss once mortgage interest, property taxes, depreciation and other business expenses are taken into consideration. The bankruptcy filing showing $0 income could be entirely legitimate and accurate. Most landlords make their profit when they sell their properties -- that's how I made my profits for sure -- so the fact that the bankruptcy filing reports no income is irrelevant to whether he is reporting the income on his tax returns. Odds are nearly 100% that he is reporting it properly.
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Landlord isn't reporting rental income on taxes, can he get in trouble?

Postby job47 » Wed Sep 12, 2012 10:23 am

What the guy could have done is done a personal bankruptcy. His business probably is not a sole proprietorship so didn't go on his personal bankruptcy. His business, if it was in trouble, would have gone in as a reorganization, a Chapter 13. Did he file a Chapter 13 for his business too? If not then his business is not in trouble.
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Landlord isn't reporting rental income on taxes, can he get in trouble?

Postby bing » Wed Sep 12, 2012 10:30 am

What the guy could have done is done a personal bankruptcy. His business probably is not a sole proprietorship so didn't go on his personal bankruptcy. His business, if it was in trouble, would have gone in as a reorganization, a Chapter 13. Did he file a Chapter 13 for his business too? If not then his business is not in trouble.
you may think you have learned the situation with your landlord but you are talking about two different entities here--he is either an individual who would report rental income on sch E
or he has an LLC which more than likely is filed as a corporation, probably not a partnership
the LLC pays its own taxes, claims its own income, ie. if the LLC is formed to manage the rentals, all that information would be on an 1120
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Landlord isn't reporting rental income on taxes, can he get in trouble?

Postby arnatt16 » Wed Sep 12, 2012 10:34 am

Are those LLCs owned by him 100%? How could you possibly know the answer to that question anyway?

Yes, this could be construed as fraud, but only if the LLC is operating at a profit. If operating at a loss, then the rent might not be considered income.
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Landlord isn't reporting rental income on taxes, can he get in trouble?

Postby williamson41 » Wed Sep 12, 2012 10:49 am

Depending on how you became privy to this type information would potentially lead to a longer prison sentence than dodging taxes. Tread lightly, very lightly.
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Landlord isn't reporting rental income on taxes, can he get in trouble?

Postby alai » Wed Sep 12, 2012 10:56 am

If this is true, he can go to prison.
But you KNOW this.
So what is your point in asking the question?
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