Third-Party Escrow Agreement

Report an interest in an escrow agreement in Schedule A. In addition, report the terms of your escrow agreement in Schedule C, Part II. Report your spouse’s interest in an escrow agreement in Schedule A only.

Third-Party Escrow Agreement: An Example

For You

Schedule A

Report your interest in an escrow agreement if the value of the escrow property was more than $1,000 at the end of the reporting period, or if the escrow property produced more than $200 in income during the reporting period.

Block A: Provide the name of the account including the name of the third-party escrow holder with whom the escrow property is held in trust, and write a short description of the nature of the transaction (e.g., “due to sale of WQX Systems, LLC to Widgets Unlimited”).

Block B: Report the value of the escrow property by marking the appropriate column.

Block C: Report the amount of income produced by the escrow property during the reporting period by marking the appropriate “Amount” column. If the amount of income is more than $200, you also need to report the type of income by marking the applicable “Type” column(s). Escrow accounts normally do not produce reportable income, which means most filers mark the “None (or less than $201)” column.

Schedule C, Part II

You also need to report your participation in an escrow agreement in Schedule C, Part II.

Terms: You need to describe the terms of the escrow agreement. Specifically, report such details as the purpose of the escrow agreement, including the name of the escrow holder or agent; the nature and amount of the underlying business or real estate transaction; and the timeframe needed to execute the transaction. In addition, report any anticipated conditions affecting the transaction’s completion.

Parties: Provide the names of the grantee, grantor, and escrow agent (or depositary) as well as their locations (city and state).

Date: Provide the month and year in which the escrow agreement began.

For Your Spouse

Schedule A

Report your spouse’s escrow agreement interest using the guidance provided above in the section titled, “For You.”

Schedule C, Part II

Do not report your spouse’s escrow agreement in Schedule C, Part II.

Click Here for Frequently Asked Questions  

 

This guide is not intended to provide investment advice, and you should not rely on statements in this guide when making investment decisions.