“May I know if i can treat this assignment fee as capital gain?”---->It depends on your business situation;as long as you flip properties on a regular basis, the IRS may consider it a business, and you must report the profits on sch C of 1040 as ordinary income. If you flip just an occasional property and have other income, the IRS may require that you treat the income as investment income and report the proceeds on Sch D of 1040, either LTCG/STCG(STCG capital gain income from assets held one year or less is taxed at the ordinary income tax rates in effect for the year, ranging from 10% to 35%. It would be considered ordinary income, which is taxed at your marginal income brackets ranging from 10% to 35% for tax year of 2012.).The advantage to reporting this way is that there is no FICA taxes due on the profits. If you treat the flipping income as business income, you will record the income or loss on the property in the year it was received. ; However, I am not sure if this is your situation, as long as you assigned your right in a contract, then, it’d be STCG if you assigned your LLC, either SMLLC/MMLLC, interest. LLC interest is considered a capital asset. And with ordinary income comes self employment taxes on Sch SE of 1040. STCG is subject to ordinary income tax rate.
“ Or is this assignment fee treated as my comission?”---->As described above ;it depends.
Last edited by Wnhough : 06-24-2012 at 10:59 PM.