Schedule C / gross receipts question

I sold a rehab property in 2008.

Under Part 1 (Income) of Schedule C, is the ‘gross receipts or sales’:

a. The amount of cash at settlement that I received.


b. The contract sales price.

If it is the contract sales price, where on Part 2 (Expenses) of Schedule C do you put the mortgage loan payoff amount?

Amount of financing has nothing to do with your taxable profit calculation. The “cost of goods sold” is the basis in your property, whether or not any of that is financed.

You did not reduce your purchase price by the amount of financing you use. In other words, when you pay $100K for a property and finance the purchase with an $80K loan, you don’t say that you only paid $20K for the property, because that loan has to be paid back. When you sell the property, you are using the amount the buyer gives you to pay off your loan, so your loan payoff is part of the proceeds of the sale.

If you got a 1099-S for the sale, report that amount as income. Under expenses, include the deductions (such as attorney fee, deed preparation fee, and other closing costs but not the mortgage payoff).

If you did not get a 1099-S, then report the contract sale price as your income and take the same expense deductions that you would have taken if you had gotten a 1099-S.

Consult a licensed tax professional for specific details.