How to deal with cash money?

[calmloki]

I expect most replies will be of the "their problem, not yours" variety, but hope to learn by some responses:

So we are selling a F&C rental property for $450k, owner carry. An offer has come with a $100k cash - like dollar bills - down payment. We have no need for that much paper cash. The buyer claims to be a tattoo artist, which does generate a lot of cash sales I'd imagine, or maybe he has a weed dispensary (my guess). I remember something about dispensaries not being able to use banks and wonder if our escrow company would reject dollar bills and insist on a cashier's check. Which led to my wondering how dispensaries DO deal with their income. There has been no suggestion of us taking the cash and claiming to sell for $350k, we will be paying our taxes right and proper.

How have different people dealt with this kind of problem? Do I have to re-watch Ozark?

[pb4uski]

Following... just our of curiosity.

[Spock]

If the buyers don't want to deposit the cash into the banking system I suspect you won't want to either. Now if the buyer would pre-wash it for you by converting it to an asset to be taken in trade....

[latexman]

Just deposit it in < $10k increments. Then no Form 8300 required. Or, deposit it all at once and fill out Form 8300.

[GrayHare]

I'd deposit it at the bank. It'll be a reported transaction but so will the house sale.

[bloom2708]

100 stacks of 10 x 100 dollar bills wouldn't scare me off.

I would worry about some counterfeit 100s in the batches.

I'd meet at the bank and have them verify each stack of bills was real.

Although unusual, I do not think this is that far out of the realm of reasonable.

[CaliKid]

Quote:

Originally Posted by Spock If the buyers don't want to deposit the cash into the banking system I suspect you won't want to either. Now if the buyer would pre-wash it for you by converting it to an asset to be taken in trade....

Why is it a problem? If you receive cash, file proper tax/bank forms, etc... what's the problem? It's legal tender, no!?

[sengsational]

I'd call my bank and ask them what would happen if I tried to deposit 100k in small bills. Get a manager on record with a satisfactory response. If the feds come at you, you pull out the closing statement. Oh, I'd have a closing attorney on board. In fact, that's probably the place to start; one must expect that this is not too uncommon if it's something you have encountered.

[Sojourner]

Quote:

Originally Posted by Spock If the buyers don't want to deposit the cash into the banking system I suspect you won't want to either.

+1

I certainly would not be willing to take a $100k paper cash (in small bills, no less!) down payment for a house sale. No way. I'd tell them to figure out a way to convert that to a cashier's check or no deal.

[GrayHare]

I've recently been at banks while cash deposits of that magnitude came in. The teller simply ran it through the counting machine, no big deal.

[jazz4cash]

Quote:

Originally Posted by latexman Just deposit it in < $10k increments. Then no Form 8300 required. Or, deposit it all at once and fill out Form 8300.

I think that’s called structuring and it is illegal.

https://www.money-education.com/reso...00-is-criminal

[calmloki]

Just called the title company and was told "sure, no problem, people do that all the time". Couldn't believe that, so emphasized that it would be in paper dollar bills, upon which I was told" Oh no, no title company would accept cash cash, it needs to be cashier's check or bank transfer."


Edit: really having a problem with saying no title company will accept cash cash

[jebmke]

Quote:

Originally Posted by jazz4cash I think that’s called structuring and it is illegal. https://www.money-education.com/reso...00-is-criminal

yes, I think the algorithms would catch this in a heartbeat

[latexman]

Quote:

Originally Posted by jazz4cash I think that’s called structuring and it is illegal. https://www.money-education.com/reso...00-is-criminal

Thanks, I didn't know that.

[MarieIG]

I heard of "cash deals" (i.e. suitcases of money) back in the day. But - the buyers and sellers were known to each other - from the same communities, so counterfeiting was not an issue.

My only "direct dealing" with large amounts of cash - was years ago, when my boss at the time had cash business clients who failed to pay property taxes. I was sent down to their particular business, given shopping bags full of cash, toddled off to pay back taxes in cash and was given receipts.

As the funds are typically exchanged at the closing - it might be difficult to verify that the cash is authentic.

When I deposited checks following the closing on my house, the bank wanted to know where I obtained the funds, and I disclosed sale of our residence. I would not attempt to deposit funds from the sale of a premises in increments - I would do it in a lump sum (unless there is a concern as to the sum being in excess of FDIC insurance) and disclose the source. (When I transferred the funds to Vanguard - they also queried as to the source of the funds.) I would want my deposits and tax returns to correspond appropriately.

- I wouldn't argue with the title company . . .

[Jerry1]

Quote:

Originally Posted by calmloki Just called the title company and was told "sure, no problem, people do that all the time". Couldn't believe that, so emphasized that it would be in paper dollar bills, upon which I was told" Oh no, no title company would NOT accept cash cash, it needs to be cashier's check or bank transfer."

I know you didn’t want “their problem, not yours” but that is the situation. Even if you were willing to deal with this, it seems like an obvious question on any form would be “from who did you get this money”, thus leading right back to it being their problem.

The most likely explanation is that the person received cash for services (tattoos) and did not report the revenue. Putting the cash into the bank will cause them to have to report the income and pay the taxes. Something I think is trying to be avoided. Bow out of it.

[calmloki]

Quote:

Originally Posted by latexman Just deposit it in < $10k increments. Then no Form 8300 required. Or, deposit it all at once and fill out Form 8300.

Thanks! Nice reading what the IRS says:

https://www.irs.gov/businesses/small...-of-over-10000

Assuming the buyer got his money legally and paid taxes on it he shouldn't have a problem with us reporting it. I imagine there is way to tell the title company the $100k down payment has been received. Don't really want to go through that exercise just for the heck of it though..

[OldShooter]

Don't accept that this is your problem. Thank them for the offer and tell them you're accepting, except that the title company will not accept actual cash. Suggest that they contact the title company to work something out.

That assumes, of course, that you believe the buyer owing you $350K is acceptable. At a minimum I would require a lien -- ideally a blanket lien on all of the buyer's assets. Regardless, you will need a lawyer to get this right. And your lawyer should draft the documents.

[pb4uski]

Where OP saws down payment, I assume that buyer is putting up $100k of paper money to be held by the escrow company and then buyer will provide remaining $350k at closing and that OP will not be providing financing.

I would think that the escrow company could accept $100k in bills and promptly deposit it at a bank and file the relevant forms with the deposit indicating who it was received from and why. The buyer is risking having to defend where the $100k of paper money came from, whether it was reported, etc if questioned.

The bank would check the authenticity of the paper money when it is deposited.

Admittedly unusual in my experience.

[mpeirce]

Your buyer should consider moving to Argentina - real estate transactions there are 100% cash in US dollars. You cart it around in suitcases...

https://www.globalpropertyguide.com/...a/Buying-Guide