Tax Tuesdays with Toby Mathis 04-30-19

Toby Mathis and Jeff Webb of Anderson Advisors strive to provide educational and accurate answers to your tax questions to prevent or minimize fees from piling up. Do you have a tax question? Submit it to taxtuesday@andersonadvisors.

Highlights/Topics:

• If you sell a flip, can you put the gain into your residential mortgage and avoid the taxes? No, you take the gain to make principal payments that have no effect on taxation
• Is interest income from the performing notes considered ordinary income? Yes
• What is an opportunity zone? TCJA gives tax incentives and benefits to invest in economically disadvantaged areas in the country
• Can you deduct meals eaten at home while working from home? Technically, yes, if there’s a business purpose
• Will I be penalized for not making estimated tax payments quarterly? It depends, if you’re required to make estimated payments; penalties will be charged
• Personal property, if I transfer to an LLC, are there tax consequences? No, unless there’s a lot of debt against it
• Are premiums for long-term disability insurance deductible as a business expense in an LLC? Yes, they can be reimbursed, but they are limited to amount and C Corp
• What are the pros and cons of having a holding LLC? Not a huge tax impact on your bottom line, but can make it tough for others to take holding LLC from you
• What’s the best way to pay your child’s tuition, if you’re running a profitable business? Three code sections deal with tuition: 117A, 127, and 132D, but there are other options
• Are self-directed IRA fees tax-deductible? No, may prefer to have 401(k) over IRA
• Can I purchase and sell real estate without selling or dissolving the LLC? Yes
• Does a living trust provide liability protection? No, the purpose is to ease distribution of your estate upon your death; there’s instructions on who to give your belongings to
• How can I protect my house, if somebody slips and trips on my personal residence? There are ways to protect your house; some states have unlimited homestead exclusion
• If I fund my LLC checking account with funds from my self-directed IRA, do I earn income on the business or have to put profits back? There’s no benefit; goes back into IRA
• How can I write-off a car to an LLC or S Corp? Two choices: Actual expense or miles method, or company will own it
• Can I write-off income we pay our nanny from a business account? No, it’s a personal expense; will probably have to pay household employee taxes for nanny

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Resources

Opportunity Zones FAQ

Opportunity Zone Heat Map

Tax Cutting Jobs Act (TCJA)

1031 Exchange

Reverse Exchange

IRS issues guidance on Tax Cuts and Jobs Act changes on business expense deductions for meals, entertainment

Publication 505 (2019), Tax Withholding and Estimated Tax

Schedule E

Code Section 117A for Scholarships and Grants

Code Section 127 for Education Assistance Program

Code Section 132D for Working Condition Fringe Benefits

1099

Rollover Business Startup (ROBS)

MileIQ

Home Office Deduction

Passive vs. Active Income

Kiddie Tax

QuickBooks

Toby Mathis

Anderson Advisors

Anderson Advisors Tax and Asset Protection Event

Tax-Wise Workshop

Anderson Advisors on YouTube