I have a client that has some money in the bank and wants to file an offer. He has never owned a home and wants to buy one. Since the IRS uses QSV of 80% when looking at real estate, couldn’t he put 20$ down and buy a home and then shield that by using the 20% QSV reduction in value when computing the RCP?
Terrance, I agree with Jean, and my experience with this is that the IRS realizes full-well that the person just stuck them for the 20%, and in the two cases we dealt with in our office like this recently the Offer unit refused the offer. They can do this and argue for CNC. Wait 4 years then consider an offer.
I think he’s going to try to buy one with no money down. Will dissipating assets always blow the deal? What if they’re disclosed? I would assume the TP would have to come up the dissipated amount to fund the offer, no?
The definition of a dissipated asset is one that should have gone to the IRS and instead went elsewhere – like paying off credit cards, etc. Here, money put down on a house when they owe to the IRS I believe would be considered dissipated. If it is it would be added back to the Offer amount the IRS wants – it is after all money it should have received. You would need to wait three years (three tax returns) to be filed before you could avoid the dissipated asset being added back. So if he wants he can buy the house, file for CNC and wait three years before looking at an Offer. Or go and clear up the IRS issue then he can focus on getting a house.