From what I know of the client I don't see any aspect of elder abuse. I don't know the reasoning for his purchasing a house for his child to live in, but I think he wants to transfer the ownership to the child but apparently doesn't intend to leave the child the full amount of the value of the house. The child is going to pay for half the value and then he said he would forgive the promissory note for the remainder half in his will.

I also suggested he just leave the house to his child in his will, but I think that messes up what he intends to divide among his children, so that is why he is seeking some payment also. He may just feel more comfortable getting the deed transferred now.

I have seen where this could be an installment sale with the first 50% reported and then it is likely there won't be another installment payment. Then there would be a need to report interest on the note reported on the return each year, whether or not he actually receives it. He suggested a 2% rate, and when I looked the federal rate was just below that around 1.87%. Does that sound right? I did ask him to check with a lawyer to seek his opinion on how to best work this transaction.