Hi guys, Francine Consol here with Innovative Transactions. I just wanted to bring you a follow-up video on the video that I posted yesterday regarding the Qualified Substitute and FERPA form. I had some really great questions come in, so I wanted to address those first. The first question we had is where in the contract can I find that the seller has to provide the buyer with the seller's affidavit form or qualified substitute form. You can find that in the AR PA Purchase Agreement paragraph 10C. It is a small paragraph that states the seller needs to provide that to the buyer within the timeframe determined in paragraph 14A of the contract. Paragraph 14A defaults to seven days, but you can enter a different date if you choose to do so. So, the seller has seven days to provide the seller affidavit form to either the buyer or the qualified substitute. Now, moving on to the next question - when does the qualified substitute have to deliver this information to the buyer? According to CART guidelines, there are no specific guidelines for when the qualified substitute must provide the QSR form to the buyer. However, it needs to be delivered before the close of escrow. Therefore, it is recommended to consult with your escrow company to ensure they can provide the qualified substitute form signed prior to the close of escrow. One of the questions that came in was regarding independent in-house escrow companies acting as the qualified substitute. Yes, they can be the qualified substitute if they are an independent escrow entity separate from the broker and licensed with the Department of Business Oversight. Another question that came up was about escrow companies providing their own FERPA form with Social Security numbers whitened out. Unfortunately, this does not meet IRS Code...
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Substitute 1099-s Form: What You Should Know
No later than December 31 of each taxable year, each individual that owns more than 20 percent of the voting securities of a corporation and, because of such ownership, receives compensation in the form of dividends or other nonmonetary consideration, other compensation, or any combination of such compensation, and that, during the period beginning on October 5, 2013, and ending February 19, 2016, did not include in gross income 120,000 or more, and, as a result of such ownership, participated in the management of the same corporation, shall prepare and file with the corporation, and shall cause the information contained in Schedule S-3 or Schedule S-4 to be furnished to, the Internal Revenue Service. Each owner shall make all such filings with the corporation no later than April 15, 2018. For purposes of this rule, the term “participant” means an owner that does not elect to report compensation in the form of dividends or other nonmonetary consideration in connection with a real estate transaction. (f) Exclusion from income and reporting. The ownership requirements of this section shall not apply with respect to a disposition of more than 20 percent of the voting securities of an individual if such disposition would make the individual a beneficiary (as defined in Section 512(c) of the federal Internal Revenue Code) under the terms of an existing beneficiary arrangement, or would result in that individual gaining a direct or indirect interest in such existing beneficiary arrangement, except that the ownership requirements of this section shall not apply with respect to— (1) transactions between individuals if the aggregate fair market value (determined under Section 1221(g)(3)(B)(iii) of the Code) of the interests received by both parties in such transactions was more than 600, and (2) with respect to a transaction between any two individuals, if such acquisition does not involve an acquisition of voting securities. For purposes of this paragraph (f), the fair market value of an interest in an entity is presumed equal to the reasonable estimated value as of the time of the transaction of all the property included with that interest in the entity.
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