Broker Liability if Customer Signs Contract Tax Gross Up Consequences
Amended Sale Transaction
Taxable Transaction
$400,000 (Sale price) x 8% (Typical closing costs) = $32,000 (Total reimbursement to customer, but considered as business expense for corporate client)
$400,000 (Sale price) x 8% (Typical closing costs) = $32,000 (Taxable income) x 60% (Tax reimbursement) = $19,200 (Broker pays to cover tax burden)
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