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Real Estate Investors, Stock Traders, and Business Owners guide to preserve their wealth, protect their assets, and prosper in the future.
Episodes
Tuesday Mar 28, 2023
Tuesday Mar 28, 2023
How can you protect yourself from bank failures and uncertain foreclosures? There is a lot of confusion around the current crisis, resulting in misinformation leaking to the masses and inciting panic among those who rely on said banks.
In this episode, Toby Mathis, Esq., of Anderson Business Advisors, is joined by Stefan Whitwell, CFA®, CIPM®, founder and Chief Investment Officer of Whitwell & Co., LLC. Stefan leads this wealth management firm and its investment practices. He is a sought-after advisor who works closely with clients at the intersection of health, wealth, and purpose. Stefan has particular expertise in tax planning and alternative investing.
Toby and Stefan will be going over the facts about the most recent round of bank failures and uncertainty. They’ll explain what questions to ask your bank or custodial firm, how multiple layers of insurance protect your accounts, and other information you need to know to make informed decisions on what to do with your money.
Highlights/Topics:
- Stefan intro
- What happened at Silicon Valley Bank
- What should you do? Separate into two buckets - a bank and a custodian
- Insured custodian accounts
- How banks vs. custodians handle your money
- Money market accounts - low vs high risk
- FDIC, SIPC, and private insurance coverages
- What banks have said about customer’s money- “Don’t worry”
- Unadvertised negotiations to segregate your accounts are available on large bank balances
- Do your homework, or ask your advisor to do the homework on your investments
Resources:
https://whitwelladvisors.com/
https://whitwelladvisors.com/team/stefan-whitwell/
Free Asset Protection Workshops
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/
https://andersonadvisors.com/
https://www.youtube.com/@TobyMathis
https://www.tiktok.com/@tobymathisesq
Tuesday Mar 21, 2023
Tuesday Mar 21, 2023
Welcome to another episode of the Tax Tuesday show. Host Toby Mathis, Esq., joins our regular guest Eliot Thomas, Esq., Manager of Tax Advisors at Anderson Business Advisors, to help answer your questions. We send a big thank you to all our people online answering your questions today - Troy, Tanya, Sergey, Ross, Kurt, Kenny, Jared, Dutch, Dana, Patty, and Matthew are all on.
On today’s episode, Eliot and Toby answer listener questions including a very detailed question on inheriting rental properties, a question on crypto-currency and taxes, one on hiring and paying your children, and we answer the title question on structuring small businesses using an S-Corp.
If you have a tax-related question for us, submit it to taxtuesday@andersonadvisors.
Highlights/Topics:
- "What is an installment sale on real estate? How do you utilize it within the tax code?" - An installment sale simply means that you're getting payment over more than one year. It could be for two years, it could be for 20.
- "What happens to accumulated depreciation on rental property when the owner passes away? Does the person inheriting the property need to account for depreciation recapture from the deceased owner when you later decide to sell that property? If the person inheriting the property gets a step-up in basis, does that new basis now become the basis to calculate depreciation on if you keep the property? Can the person inheriting the rental property also have a new cost segregation done? And would that be affected by any cost segregation done previously? Any other tax considerations to be aware of when inheriting rental property?" — It goes away. Don’t gift it to your kids before you die! Your new value “step up in basis” is what you calculate from. New cost-seg, yes, nothing relates to the old cost seg.
- "I received a 1099 INT from a bankrupt crypto company I invested with called Celsius." The money on the 1099 never touched my bank account as it is currently locked in a crypto wallet on their website for the last eight months. It was interest from USDC coins I staked, but I left it all in the wallet to reinvest. Am I supposed to pay taxes on this money that I never received, or can I leave it be and ignore it until the bankruptcy is resolved?" – you need to report it and you need to pay tax on it.
- "How does the tax law treat the hiring of children by an LLC? At what age can they be hired? Which circulars discuss this?" - when they're under 18, no Social Security, no Medicare taxes on those, but they must be paid by an LLC that's owned by mom and dad if it's a disregarded LLC or a partnership, and they have to be paid as W-2 employees.
- "I'm using the home office and depreciating part of the house. How will it look on the taxes that the year I sell it?" – I like using the administrative office in the home and having an S-corp, a C-corp, or an LLC taxed as an S-corp or a C-corp, reimbursing me for the value of my space because then I don't have depreciation recapture.
- "Are there any tax deductions for real estate held in a self-directed IRA?” When you see SDIRA, that just stands for self-directed IRA. - you're going to lose out on those big things like depreciation, et cetera, so no tax benefit.
- “I was hit hard with UBIT inside my Roth, where I owed $200,000 on a $400,000 gain. The company is no longer in business, trying to scratch back any part of the UBIT. Is it possible that it happened?”-- It was leveraged. Valerie, this is unrelated debt financed income. Yes, there is something you can do.
- "Can you explain S-corp taxes with shared distribution? When it's time to file taxes, do we pay taxes on all shared distributions?" Do you have to pay taxes on everything you receive or just the profits, et cetera? - An S-corp has two primary ways of getting paid as an owner, shareholder. One would be W-2 wages and the other is all the other income.
- "I started in LLC, C-corp with Anderson advisors on October 22 for real estate. I have paid $20,000-plus in networks, education, probably getting training. I did not do any deals and 2022 for my new real estate business. Can I still write all that off for the business? I have used my personal credit card to make purchases for the new REI business, real estate business. Since I do not have a business credit card, did I break the corporate veil?" – Yes, you can deduct those expenses. They are going to go on your C-corporation. If they were incurred prior to the date of incorporation, there'll be what we call startup costs.
- What org structure for small business is audited the least and provides the lowest tax liability?" – That's going to be your S-corporation, typically. It's going to give you a lot of deductions and reimbursements that you can take advantage of.
- "How do I best utilize my C-corp status for tax savings and investing in real estate? We have my 1099 paycheck going to our C-corp bank account and then pay out about half of it to our personal bank account as a paycheck. How do I utilize the other half that's sitting in the C-corp accounts, such as to buy new short-term rental or long-term rental investment property?" - the C-corporation, before you do the loan, you can take a lot of reimbursements—accountable plan reimbursements, corporate meetings for 280A, medical reimbursements. That all gets some money out to you tax-free deduction to your C-corporation. Get these first, then take a loan.
- Rapid-fire chat questions answered at the end of the show
Resources:
taxtuesday@andersonadvisors.com
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/
https://andersonadvisors.com/
http://aba.link/youtube
https://www.youtube.com/@TobyMathis
https://www.tiktok.com/@tobymathisesq
Tuesday Mar 14, 2023
Tuesday Mar 14, 2023
In this episode, Clint Coons, Esq., of Anderson Business Advisors, welcomes Jonathan Farber, a successful real estate investor who is helping others achieve financial freedom with Short-term Rentals. Jon currently owns 8 STRs, a 24-unit rental property, and continues to add properties year after year. He is the host of “Millennial Millionaires Through Real Estate” podcast, has amassed over 167K followers between TikTok and Instagram, and he sends a weekly newsletter to nearly 14K contacts.
Clint and Jonathan discuss how Jon decided to opt out of the corporate world at age 21 to create wealth with real estate investing, and how he screens, hires, trains, (and sometimes fires) virtual assistants to help him do all the tasks that he either doesn’t enjoy, isn’t very good at, or simply doesn’t have time for. You can learn exactly how Jon does all this by checking out his extensive content on just about every social media platform.
Highlights/Topics:
- Jonathan’s origin story and how he took a different path than “Corporate America”
- House-hacking at age 21- a great jump start
- Getting into the Short Term Rental market
- Beginning with a VA- choose one task - some people love to do the things you hate
- Delegate more to VAs as your business grows
- Finding off-market deals with VAs
- The process of finding the right VA- Loom videos for screening, “test/screening” emails set up in Gmail
- Training and onboarding VAs - Loom videos of each “repeatable task”
- 10-14 days will show if your new VA can cut it
- Creating content to teach others these systems and methods
- Reach out with a DM to Jonathan on any social platform to learn more
Resources:
https://www.linkedin.com/in/jonathanfarber1/
https://www.instagram.com/jonjfarb/
https://twitter.com/jonjfarb
https://www.youtube.com/channel/UCZSsPp1_ZwurdZZAKYNo1nw
https://www.tiktok.com/@jonjfarb
Free Asset Protection Workshops
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/
https://andersonadvisors.com/
https://www.youtube.com/channel/UC5GX-U6VbvMkhSM1ONBiW8w
Tuesday Mar 07, 2023
Tuesday Mar 07, 2023
It’s Tax Tuesday again, and today we’re mixing it up – this episode is hosted by Anderson Advisors’ Michael Bowman, Esq, who welcomes two of Anderson’s expert tax pros, Eliot Thomas, Esq., and Kurt Bergfjord, Esq. And as always we’ve got our talented and experienced tax advisors manning the chat questions in the office.
On today’s episode, the guys review all the documents and receipts that you should be gathering up in preparation for filing your taxes, and answer multiple listener questions around the pros and cons of C-Corps, S-Corps, Partnerships, and the audit magnet - Sole Proprietorships. The discussion also covers our episode title question - are there benefits to putting your primary residence in a trust - which is really only for asset protection and estate planning - there are no tax benefits to doing so.
If you have a tax-related question for us, submit it to taxtuesday@andersonadvisors.
Highlights/Topics:
- "Even if I show income on my tax return from rental and business activity as a sole proprietorship, and self-employed but no taxable income because I use my large net operating loss to cover all taxes, is my income still considered income or will it be a hindrance as far as getting an investment loan or home equity line?" – It depends - Some are going to look at this, it will ding you, and you won't be able to get a loan. Others will take it into consideration and analyze the tax return.
- "I currently have two LLCs in California that I file as a partnership. Should I create another LLC as a holding for both LLCs? And should that be disregarded or filed as a partnership as well? Of course, there is the additional cost of $800 for California as well. What's your suggestion?" – from the legal point of view, it might be a better idea to have that holding company and all those assets coming into it.
- "How can a full-time LP investor in private equity in real estate syndications as well as stock investor utilizing options for income, structure such as to offset income of these activities with expenses, syndication conferences, to vet sponsors, subscription services, travel for investment briefings, computer equipment, expenses, et cetera? Assets are held in a Wyoming LLC and property trust for the stocks. Would a management C-corp make sense having one ‘client?’ I am aware of people in my circumstances that write off expenses on their schedule C, but I recall Anderson doesn't recommend that." – If we could utilize that management corp, maybe we can capture some of those benefits that you otherwise wouldn't be entitled to.
- "How is REPS applied to a tax return?" – If you are a real estate professional (REP)for all intents and purposes, then you can actually turn that otherwise passive income into non-passive income. I's going to be on Schedule E page one or Schedule E page two if you have a K-1
- "We have seven rental properties set up with the ABA structure. My husband works full-time for the government. I manage our home and rental properties. Two properties are mortgaged, the rest are paid for. Now, both in our 50s, we're financially comfortable with a large cushion. We got retirement funds, mutual funds, properties, kids, education funds, et cetera, but we are getting killed in taxes every year. I feel like we are working to pay taxes. We don't live extravagantly, and still drive the same cars for 10–15 plus years. Taxes feel like a punishment for saving when we were younger." - Ideas to save on taxes include becoming a REP, depreciation, cost-seg study, there's even a nickname- “short-term rental loophole”
- "What are the tax benefits of putting my primary residence in a trust?" There is no asset protection, but if it's in the right kind of revocable trust, then we still get to take advantage of our section 121 of tax exemption from gains on the sale of your primary residence—$250,000 single, $500,000 married filing joint.
- "I want to be as anonymous as possible. What is the best business structure and ways to submit taxes? I do not want the tax info to flow down to my personal taxes." - When we talk about anonymity, anyone looking at your personal tax return is really not going to have too much of a purview into your business activities.
- “Should I do a cost seg for a condo?” It depends - Have you had it for a while? are you a REP? Are you renting it out? Have you been appreciating for a while?
- "What is the best corporate structure to have in place that can also allow for tax savings?" We've covered this - C-corp, S-corp, partnership, and then the worst would be sole proprietorship.
- "What tax incentives are there for real estate investors to not have to pay an absurd amount in taxes?" - REP status, short-term rentals, cost seg studies, 1031 exchange, keep good books!
- "As a real estate investor opening my first LLC, which is the best for me to use, S-corp or C-corp? - it depends - do not put appreciating property in a C-Corp, but C is good for short terms or flips.
- "I started my LLC last year to begin my search for buying a business or real estate. Currently, I am a W-2 employee while I get started. My question is, can I write off any expenses since I did not make any money in my LLC? We've incurred expenses, but I don't have any income.” - was it open for business, or are you in the exploratory phase? timing on when to deduct may be more important.
Resources:
taxtuesday@andersonadvisors.com
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/
https://andersonadvisors.com/
Thursday Feb 23, 2023
Thursday Feb 23, 2023
In this episode, Toby Mathis, Esq., of Anderson Business Advisors, is joined by Doug Sandler, CEO of Turnkey Podcast Productions. Doug co-founded Turnkey to help individuals build community, grow influence, and make money using podcasting. Doug is the author of Amazon best seller “Nice Guys Finish First,” and hosts his own podcast “Nice Guys on Business.”
Doug and Toby discuss how Doug went from being a highly paid bar mitzvah DJ to a successful podcast coach, who should and should not be trying to monetize their podcast with Doug’s program, and you’ll hear a few success stories of Doug’s former clients who created huge revenue streams using his methods.
Highlights/Topics:
- Promoting his book “Nice Guys Finish First”
- “Podfade” at around episode 10-11, many quit
- Revenue is not going to come from advertising
- The “golden opportunity” is the guest in the guest seat
- Asking questions – interviewer vs. salesperson
- Ideal candidates to create a podcast
- “Lifetime value” of a guest to invite on your podcast
- Monetizing in different time frames and diversifying
- Success stories - Lou Diamond and Stan the Annuity Man
- Working with Doug requires an open mind and blank slate
- Know your “MOM” - Market, Offer, and Message
- 5 Ways to Make Money Podcasting – the call to action on today’s show
Resources
https://www.linkedin.com/in/doug-sandler-1a346649/
Free PDF 5 Ways to Make Money Podcasting
https://turnkeypodcast.com/toby
https://turnkeypodcast.com/
https://www.niceguysonbusiness.com/
Free Asset Protection Workshops
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/
https://andersonadvisors.com/
https://www.youtube.com/@TobyMathis
https://www.tiktok.com/@tobymathisesq
Wednesday Feb 22, 2023
Wednesday Feb 22, 2023
It’s Tax Tuesday again, and Toby Mathis, Esq., hosts, with special guest Eliot Thomas from Anderson Advisors, and they are here to help answer your questions.
On today’s episode, Eliot and Toby answer listener questions including what can be written off as far as expenses for the preparation costs of setting up an LLC, several questions (as usual) around short- and long-term rentals, real estate investments, passive vs. active income connected to your properties, and quite a bit of information about cost segregation – who to work with, what you can deduct, the timelines, etc.
If you have a tax-related question for us, submit it to taxtuesday@andersonadvisors.
Highlights/Topics:
- "If I put a short-term rental in operation in October or November, does the bonus depreciation get prorated accordingly?" We're looking at whether or not we prorate from October November for the rest of the year, or how do we handle that? – It doesn't matter whether you bought it in January or December, you put it into service before the end of the year, not prorated.
- "Useful strategies for pulling money out of a small business tax-free, not being double taxed?" - The only time you ever worry about a double tax is when you have a C-corp because they're taxed at the corporate level.
- "Mileage deduction in a partnership, does this go on a Schedule C?" - No, it doesn't.
- Number four, "Is the expense related to the preparation of your LLC tax deductible such as travel costs to go see a property, et cetera?" – The expense relating to the preparation of your LLC is absolutely deductible. It's going to be an organization expense up to $5000 for the year, and that includes the state fees, the registered agent fees, accounting fees, attorney's fees.
- "Please talk about the $25,000 deduction for real estate investing. Where does it apply and where doesn't it? I have only one rental single-family home at this time." - When you have passive losses, normally, they only offset passive income. One of the exceptions is this $25,000 active participation.
- "How should I set up my taxes on my properties?” – We're looking at an LLC (Limited Liability Company), probably one that's what we call disregarded. Disregarded means it just doesn't file a tax return.
- “I have two rental properties in California I've been managing full-time since 2021. I have been working more than 700 hours per year. Do I qualify for real estate professional status? If so, what is the process at the time of filing the 2022 taxes?" – It's 26 USC 469(c)(7). You can go straight to it. You need to aggregate those two properties as one activity. Otherwise, you have to meet that test for each property.
- "What is cost segregation?" - Cost segregation is a fancy way of saying you're breaking a piece of property that's real estate into its pieces, as opposed to just treating it as one uniform structure. (Picket fence, sidewalk, driveway pavers, new carpet, new appliances, etc.)...you need to do what's called a cost segregation test or report, which is what cost segregation refers to, which means having an accountant pop out to the house, and break these down into their pieces.
- "Is it more beneficial as an LLC owner to pay myself as a W-2 or 1099 employee?" - There's no such thing as a 1099 employee, The correct term is a W-2 employee or a 1099 independent contractor. I would say it depends on how that LLC is taxed. If you are an LLC that's disregarded and your sole proprietorship, you cannot pay yourself a salary.
- "What are some creative ways to save money on the gains from real estate investing?" - Here are some cool ones - (1) The low-lying fruit, 1031 Exchange and you defer the gain. (2) You can also still do this thing called a qualified opportunity zone.
- Lastly, "Hi. How are crypto gains taxed? When? At the time of selling the crypto to convert back to cash? I have been doing short-term trading with my own account. Please advise the best strategies to minimize taxes. My hubby is W-2 and I'm a real estate professional with three rentals. Thank you." – Once you own the crypto, it's when you sell it or when you convert it, or trade it for something else of value. Protect it with a partnership LLC, or put it in a Roth, or deferred retirement account.
- Rapid-fire chat questions answered at the end of the show
Resources:
https://costsegauthority.com/
taxtuesday@andersonadvisors.com
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/
https://andersonadvisors.com/
https://www.youtube.com/@TobyMathis
https://www.tiktok.com/@tobymathisesq
Thursday Feb 16, 2023
Thursday Feb 16, 2023
In this episode, Toby Mathis, Esq., of Anderson Business Advisors, is joined by Atticus LeBlanc of Padsplit. PadSplit was founded in 2017 to leverage housing as a vehicle for financial independence for low-income workers that serve our communities.
Toby and Atticus discuss how using Padsplit solves problems for renters and real estate investors, providing affordable weekly rate room options AND increasing your net income from your investment property by splitting it up into multiple one-room rentals. Padsplit takes care of all the logistics so you don’t have to – applications, approvals, collections, house-rule complaints, renter ratings, and more. While they currently only operate in a few major metropolitan areas, if you reach out to them, they will explore expanding and operating in your area.
Highlights/Topics:
- Think about the unused space in your home - like a formal dining room
- The market is full of single renters looking for affordable rooms
- Issues - lack of inventory, the affordability crisis, and builders are creating giant homes
- Padsplit - what is it, and how is it different from AirBnB?
- Padsplit handles all the logistics that you don’t want to - applications, approvals, collections, house-rule issues, etc.
- Weekly rentals have had a false stigma of being for transients
- Turnover costs of one single room is simply a mattress cover
- Hosts provide only wi-fi - but things like a smart tv creates a ‘premium’ rental price
- Why doesn’t everyone do this? Hiring a property manager and Padsplit can be more work than a traditional rental
- Advice - get out there and help solve the affordable housing crisis!
Resources:
https://www.padsplit.com/
https://www.linkedin.com/in/atticus-leblanc-3960466/
Free Asset Protection Workshops
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/
https://andersonadvisors.com/
https://www.youtube.com/@TobyMathis
https://www.tiktok.com/@tobymathisesq
Tuesday Feb 14, 2023
Tuesday Feb 14, 2023
In this episode, Toby Mathis, Esq., and Clint Coons, Esq., attorneys at Anderson Business Advisors discuss the pros and cons of investing during a “recession.”
Right now there are some great deals in the market for investors. Home values are being forced down by rising interest rates, there is an extreme lack of supply and plenty of demand, and rents are very high due to inflation (creating that all-important cash flow from investment properties.) Toby and Clint tell you what to look for (raw land, manufactured housing, tax liens etc.) and what to avoid (flipping homes and adjustable rate mortgages) in the current real estate market.
Highlights/Topics:
- Recession effects on real estate- get those great deals!
- Increased interest rates - forcing down home values
- What are some of the risks of investing right now in this market? Avoid flipping, avoid Adjustable Rate Mortgages (ARMs)
- Opportunities: Raw land investing, manufactured housing, “subject to” deals, and tax liens and deeds
- Protecting yourself in case of recession, now rather than later - implement your LLCs, trusts, separate the personal from business, etc.
- Cash flow is more important than the home’s value
- Post-recession, the market will stagnate, then climb again
- Join us at one of our free events
Resources:
https://infinityinvesting.com/
Infinity Investing Free One-Day Workshops
https://infinityinvesting.com/infinity-investing-workshops/
Free Asset Protection Workshops
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/
https://andersonadvisors.com/
https://www.youtube.com/@TobyMathis
https://www.tiktok.com/@tobymathisesq
https://www.youtube.com/channel/UC5GX-U6VbvMkhSM1ONBiW8w
Thursday Feb 09, 2023
Thursday Feb 09, 2023
Today we’ve got another interesting episode of Anderson Business Advisors. Host Toby Mathis, Esq., speaks with special guest Rabbi Natan Alexander from Israel. In recent years, Rabbi Natan has taken all his collective experience and education to work with Leader of the Pack, which he founded in 2018. Leader of the Pack is a Brotherhood, a movement, created by Rabbi Natan Alexander to re-empower men to become the great individuals that God designed them to be. The group is a tribe of men constantly working on themselves and holding each other accountable to Stand Up, Lead and Protect.
You’ll hear how the men in the program learn a wide range of skills such as Krav Maga and other self-defense tactics, weapons training and practice, heightening your awareness of potential threats in your surroundings, and other methods that enable men to be aware of, and trust, their instinct, and learn to be violent [when it is called for], to keep themselves and their families safe.
Highlights/Topics:
- The resistance to training men to be better men
- Rabbi Natan’s story
- Men and their roles - changing through the decades
- Religion is not the main focus of LOTP
- The type of skills and training provided
- Women also want to learn these skills
- A story about maintaining honor in the global LOTP weekly calls
- Keeping yourself and your family safe means forgetting about legal or religious rules – it should be pure instinct
- An exercise in being aware of potential threats and questioning aberrations
- Listening to your instincts
- Live event costs are all-inclusive and very affordable
Resources:
ravnatana@gmail.com
Register for Live Events with Leader of the Pack
https://leaderofthepack.co.il/event-specials/
https://leaderofthepack.co.il/
https://andersonadvisors.com/
https://www.youtube.com/@TobyMathis
https://www.tiktok.com/@tobymathisesq
Tuesday Feb 07, 2023
Tuesday Feb 07, 2023
Welcome to another Tax Tuesday show. Toby Mathis, Esq., hosts, with special guest Eliot Thomas from Anderson Advisors, and they are here to help answer your questions. On today’s episode, Eliot and Toby dig into some listener questions surrounding the differences between an LLC and S-Corp and the pros and cons of each, avoiding capital gains taxes, and the usual assortment of questions about short-term rental properties (ie AirBnB), cost segregation, and qualifications to claim Real Estate Professional status.
If you have a tax-related question for us, submit it to taxtuesday@andersonadvisors.
Highlights/Topics:
- "If I choose cost segregation, do I have to apply the cost seg to all properties purchased in the same year, previous years, and future years? What are the disadvantages—tax aspects and non-tax aspects—of doing a cost segregation?" – If you do a cost seg, you're not required to use it on your other properties. That's very specific to one property.
- "I bought an apartment to fix it and put it up in Airbnb and to get the advantage of new business tax deductions. But now that we are thinking of renting it to regular tenants, this will be an investment instead of a business, correct? What are some of the deductions that we can take advantage of if we rent it to regular tenants instead of Airbnb such as renovations, expenses, travel expenses, furniture, and so on and so forth?" – Turning it into a long-term rental, you pretty much get some of the same deductions you would as a long-term versus short-term. They're the same.
- "Is it beneficial to set up an LLC versus an S-corp? And are you able to pay yourself a reasonable salary through an LLC?"- There are rules behind that. If you don't choose a tax status forth, the IRS will choose for you the basics… like Eliot said, it depends on how the LLC is taxed.
- "How should I hold my stock positions? What is the best way to deal with high capital gains consequences?" - We often talk about setting up a trading partnership, that might be one option.
- "My husband will work as a real estate agent to qualify for the IRS’ definition of real estate professional, and potentially use the passive losses from our rental property to offset my W-2 income on our joint return. The IRS rule says my husband has to own at least 5% interest in the real estate company employing him. Does he need to form an S-corp to sign the contract with the brokerage firm so that he owns at least 5% interest?" - Yes, that's exactly right. You're going to want to have his earnings, if you will, from there being paid through an S-corporation that he owns, theoretically 100%, hopefully.
- "I sold an investment property on October 21 and paid a very heavy capital gains tax. Can I get some of that back if I buy another investment property today or now?" - No. We missed the boat on that. We can't carry back on any of these items at this point in the code. Maybe that'll change in the future, but right now, we don't have the ability to go back and change anything.
- "How many years can we go back without showing a profit?" - If you have too much of a loss, the IRS could come in and say, hey, is this really a for-profit business venture that you have going on here?
- "Is it okay to do your own taxes as a business owner if you had a CPA for 20 years?” Why is it a questionable call there? - We just had a massive overhaul of our tax code. You're going to want a CPA, somebody who does taxes, EA, tax attorney, whoever it is, to walk you through some of those things.
- "I bought a single family rental in November and am still repairing. No income yet. How do I record depreciation and costs for 2022?" - If we didn't have it available for rent in 2022, there isn't any deduction to take in those as far as operational, depreciation, or anything like that.
- "How to save taxes by flipping and renting houses?" - We're going to recommend a C -Corp probably as a management company so you can do all your activities that you're overseeing of your rentals through a C-corporation.
- "I just started my business in August of 2022. I would like to understand what from a tax perspective should be on the top of my mind as we prepare the first returns." - It depends on your business, but you're going to want to categorize and have an idea of what expenses are, to determine whether it's a net profit or net loss.
- Lastly, "If an investor purchases a property that is lower in value than the property sold in a 1031 exchange, will the IRS disqualify the exchange entirely?" – No. What's going to happen is you just may not have full deferment of the capital gains, but they're not going to disqualify it on that premise. Work with a qualified intermediary!
- Email us with your questions, and be sure to subscribe to our podcast. And if you are already a subscriber, please provide us a review of what you thought!
Resources:
taxtuesday@andersonadvisors.com
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/