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Form K-1 - Rental property partnership to avoid community property laws (TX)?

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Form K-1 - Rental property partnership to avoid community property laws (TX)?

Postby warton26 » Tue Apr 12, 2011 3:10 am

My wife and I have separate accounts but we file jointly. Back in 2006, my in-laws 'bought' a house close to our hours (sigh). I was told by my wife that her brother bought them the house. During tax filing for 2009 earlier this year, she suddenly handed me this K-1 form for a partnership S-Corp to report of a loss of a few thousand dollars described as rental expenses. She did not share any details regarding this. I am questioning whether that K-1 was filed on behalf of a shell corporation created as an umbrella for the house so as to avoid any circumstances of community property under family law if we were to get into a dispute (very likely). My wife is on the deed and title of our house. My question is will the nature of this K-1 filing provide me the right to challenge any questionable dealings and allow me to be on the deed for the other house? Is there a precedent for illegal/fraudulent activities under marriage law?
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Form K-1 - Rental property partnership to avoid community property laws (TX)?

Postby newyddilyn60 » Tue Apr 12, 2011 3:11 am

you're in the middle of a minefield, mate. anything you do that your wife finds out you did will likely have nasty side effects for your marriage.

so, you start by quietly gathering more information. from your office [or Starbucks] when she isn't around, use the tax assessor's website to look up the ownership of the house your inlaws live in. then call up the records from the property recorder's office and see is there's any clue as to who the new owners are. be sure to also look for a mortgage -- which is usually the next page after the deed in the property recorder's records.

you may have to follow the paper trail to the ownership of a corporation. That's done via the state government's website [secretary of state in many states]. there'll be a filing for any corporation that is doing a rental business in Texas, even if it is only a representative and agent for service from a corporation organized in Nevada or somewhere. Then you follow the trail as far as possible along those lines, too.

now, if your wife used her separate funds from before your marriage [whether in conjunction with her brother or not] to put her parents into this house, you have no claim on the property and should not be liable on the mortgage.

if she used community funds, you do.

but if she did and if you make too much noise -- you could end up with a "Texas divorce". [that's where the court divides the estate -- she gets the assets and you get the bills.]
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