<p>I'm filling out a FAFSA for the first time and don't know whether to report some assets we own as investments, net worth of a business, or to treat them as exempt because they are held in a "small business" vehicle.</p>
<p>This is a family limited partnership wholly owned by our immediate family, with less than 100 employees (zero, to be exact), so if it is a business it a "small" business, and thus exempt from FAFSA reporting.</p>
<p>Some of its assets are investment type assets, though, such as cash, real estate, and real estate mortgages receivable.</p>
<p>Can someone point me to rules defining the differences between investment assets vs. business assets?</p>
<p>So you have a family limited partnership with zero employees - does this business do anything or was it just formed to hold investments / real estate as a method of transferring wealth from one generation to another at a discounted rate based on lack of marketability?</p>
<p>Good question, Madison, but unfortunately the answer isn’t simple. It was formed to hold assets and make investments, but we never played the discounted valuation game.</p>
<p>The primary business purpose over the past several years has been making high yielding secured real estate loans, aka hard money lending.</p>
<p>With the economic collapse, our borrowers’ problems have become our problems, cash flow is down, and we are foreclosing on lots of loans. Where in the past it was sort of an “armchair” investment business, I would have characterized it as an investment vehicle but now I spend a lot of time and resources managing the foreclosed assets more as a business. I was president of a real estate development company for years before I retired about 8 years ago, so this is all right up my alley.</p>
<p>I called the FAFSA help line and described my situation and the rep told me to treat it as a small business. I understand the logic in that, and reporting it that way will help our EFC, but I’m concerned about honesty and full disclosure.</p>
<p>DS’s college (which is famous for generous aid) uses both FAFSA and their own fin aid app, so I think I’ll complete FAFSA with the Ltd. Partnership treated as a small business, and I’ll be careful on the college’s app to disclose all of the partnership assets and probably include a cover letter fully explaining the details.</p>
<p>Oh, good pick-up, Madison - I didn’t read carefully enough. I saw the “less than 100 employees” but missed the “0 to be exact.” This is NOT a business as such. Assets would be reportable.</p>