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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
Wednesday May 08, 2019
Wednesday May 08, 2019
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
For all questions/answers discussed, sign up to be a Platinum member to view the replay!
Go to iTunes to leave a review of the Tax Tuesday podcast.
Resources
Publication 505 (2019), Tax Withholding and Estimated Tax
Code Section 117A for Scholarships and Grants
Code Section 127 for Education Assistance Program
Code Section 132D for Working Condition Fringe Benefits
Rollover Business Startup (ROBS)
Wednesday May 01, 2019
Wednesday May 01, 2019
Most real estate investors want to use other people’s money (OPM). Why use their own, when they can use OPM to put into deals? Why risk your own money, when you can push it onto someone else? Find real estate investors willing to lend money, especially to flippers. Today, Clint Coons of Anderson Business Advisors talks about lending with Paul Jackson and Rick Morgan of Residential Capital Partners.
Highlights/Topics:
- Expertise, knowledge, and relationships with investors and banks allowed Rick and Paul to offer a lending service to make profits vs. doing the buying and flipping themselves
- Accounting is the language of business; dollars are going out and coming in
- Residential Capital Partners: Originated in 2009, during the downturn when banks sold bad assets and took in Troubled Asset Relief Program (TARP) money
- We Buy Ugly Houses: HomeVestors attract new franchisees and grow its business; Rick and Paul use franchise to underwrite debt acquisition of single-family distressed paper
- Millenials want to rent, instead of buy a place
- Problems for Property Flippers: Hard money lender puts deal together; shock sets in when money for rehab isn’t available
- Residential Capital Partners offer consistent delivery, clear communication, description of how money is priced and structured, and do what’s promised
- Keeping the cash in borrower’s pocket is key to staying healthy in fix-and-flip business
- Residential Capital Partners primarily do cosmetic types of rehab loans
- Residential Capital Partners’ Loan Process: Citizens profit, protect, and act as collateral
- Why do flippers fail? First rule of business: Whatever happens, live to fight another day
- Take this to Heart: Paul and Rick want people to be profitable and successful
Resources
Wednesday Apr 24, 2019
Wednesday Apr 24, 2019
Tax Day on April 15 has come and gone. Were you hit hard this year? Don’t give up or lose hope. According to Toby Mathis and Jeff Webb of Anderson Advisors, there’s still time, and things, you can do to recover. Do you have a tax question? Submit it to taxtuesday@andersonadvisors.
Highlights/Topics:
- I am an S Corp and ordained minister. Can I take housing allowance? Minister's housing/parsonage is excludable from gross income, but not self-employment taxes
- Do you have to pay back home office depreciation when you sell the house? Yes, unless accountable plan is in place for reimbursement
- To report installment income on Form 6252, do you also need to submit Form 4797? Yes, along with Schedule D
- Are there any advantages to moving software business into designated opportunity zone? Not really, if you have an existing business
- Did Tax Cutting Jobs Act (TCJA) help big businesses more than small businesses? Yes, it cut corporate taxes almost in half, but only gave small businesses a 20% deduction
- What’s the difference between big and small business? Big business does at least $100 million in revenue and has multiple owners
- Should I use my tax refund toward paying estimated quarterly taxes for 2019? If I overpay the estimate, will I have to pay taxes on future refunds? Never hurts to overpay estimates; include first-quarter payment when making extension payment
- What’s the Rollover for Business Startups (ROBS) structure for investment property construction? Partnering with your own retirement plan has to be a C Corp; don’t use with investment property
- Can you defer taxes on capital gains on the sale of property, if you put it toward an existing residential mortgage? No; only way to defer capital gains is via 1031 exchange
- When I record an expense, maybe an office desk for S Corp, do I need to record the sales tax? If you buy a desk for your business, you're paying sales tax on it
- Can you depreciate a property used for short-term rentals, like AirBNB? No, if average rental is seven days or less; yes, if more than seven days
- Can LLC owned by spouses be a disregarded entity? Yes, if in a community property state; both spouses can be owners, and it’s treated as a disregarded entity
- Can we take unreimbursed accountable plan expenses, office space against W2 income? No, TCJA removed unreimbursed business expenses on Schedule A
For all questions/answers discussed, sign up to be a Platinum member to view the replay!
Go to iTunes to leave a review of the Tax Tuesday podcast.
Resources
Ministers' Compensation & Housing Allowance
Cost Segregation: Increased Tax Deductions for Commercial Property
Net Investment Income Tax (NIIT)
Partner's Instructions for Schedule K-1 (Form 1065)
Rollover Business Startup (ROBS)
Wednesday Apr 17, 2019
Wednesday Apr 17, 2019
Toby Mathis of Anderson Business Advisors welcomes Raghee Horner, who started investing at an early age thanks to her mother. When Raghee’s father passed away, her mother realized that the stock market was a way to be financially stable. So, Raghee’s mother became a market timer and active investor. Raghee followed in her footsteps. She is now a trader, investor, author, and mentor.
Highlights/Topics:
- How to be a Good Investor: Read, look, and buy more for a better deal
- Why Raghee loves markets and Jack Bogle; “Being an investor and keeping an eye in the market keeps you young.”
- Surrounded by Screens: Multiple monitors increase productivity for traders/investors
- Timeframe (short or elongated) dictates type of market participant
- Trump’s Tweets: Do you play them? No way to time tweets, hide under the desk a minute
- Move toward momentum based on scheduled events, earnings, and economic data
- Trader vs. Investor: What’s the difference? Ownership or buying and selling
- What would Raghee tell her younger self about investing and trading? Keep it simple
- Importance of understanding macroeconomic rate of change of money supply, monetary policy, growth, and inflation
- Fear of Forex Market: Forex is trading money for money, not about understanding stocks to invest in them
- Awful Data: Breaking down a rated change when looking at wage inflation colliding with lower revenue is a perfect storm for disaster
- How do you hedge? Pay the piper; convince companies to reinvest, not in buybacks
- Financial market is like a playground; specializing in a market or symbol forces trades and investments
- Patience, Cool Down to Contracting: Risk of interest rates being pulled back or hiked up
- Raghee recommends protection via long gold, silver, real estate, and REITs
Resources
Raghee Horner on SimpleTrading
Wednesday Apr 10, 2019
Wednesday Apr 10, 2019
Is your 2018 personal tax return ready to be submitted to the Internal Revenue Service (IRS) by April 15? Or, are you still hungry for Toby Mathis and Jeff Webb of Anderson Advisors to answer your tax questions? They bring tax knowledge to the masses; although sometimes they would rather bring tacos. It’s like Taco Tuesday, but with tax. Do you have a tax question? Submit it to taxtuesday@andersonadvisors.
Highlights/Topics:
- When’s your personal tax return due? April 15, but you can file an extension to submit it on October 15
- What’s the penalty for not filing a 5500 first solo 401(k)? About $750
- I have a C Corp with no business; do I still need to file? Yes; if filing as a corporation that exists, you are required to file a return, but partnership rules are a bit different
- What’s the $250,000 of income are total asset value? Total value of all assets; not for an IRA, but a 401(k)
- What deductions can I take as a W2 contractor? Most employee reimburse expenses were removed; take standard deduction, or itemize without reimburse expenses
- Can I reimburse health insurance from the S Corp I own? Yes, but you account that as wages, so you're paying tax on it
- How do you report and issue a 1099 MISC? Report payments of more than $600 made to others that are not corporations on the 1099 MISC form with the vendor’s name on it
- What’s required to move an existing business to an opportunity zone? You can’t take something you already own and make it into an opportunity zone property, unless somebody's investing in it that's not related to you
- What's the difference between an opportunity zone and 1031 exchange? 1031 exchange is for real estate only, and you have to exchange property for more real estate
- Where do I find areas that are opportunity zones? Is there a Website? Yes, just search for Opportunity Zone Heat Map on Google
- Can we write off repair expenses, like roof shingles for personal hall? No because It is personal property; you can’t write things off for repairing your house
For all questions/answers discussed, sign up to be a Platinum member to view the replay!
Go to iTunes to leave a review of the Tax Tuesday podcast.
Resources
Extension of Time To File Your Tax Return
Tax Cuts and Jobs Act, Provision 11011 Section 199A - Qualified Business Income Deduction FAQs
Wednesday Apr 03, 2019
Wednesday Apr 03, 2019
Toby Mathis of Anderson Business Advisors welcomes Meg Busing, founder of the Midwest YouCan Foundation. During her freshman year of high school, she sustained a traumatic brain injury (TBI) that put her in a coma and on life support. Eventually, Meg recovered physically, but had some mental challenges. About 10 years later, while at nursing school, she started having seizures. She shares her long journey of dealing with epilepsy and not being able to find a cure with medications. She had brain surgery to remove part of her brain and scar tissue from the TBI. Meg’s personal experience inspired her to give back by creating Camp YouCan for kids and teens to help them discover what they can do, despite their epilepsy.
Highlights/Topics:
- Traumatic events that occur in life either shape you, or you use it to shape yourself
- Meg’s TBI was the main reason why she wanted to be a nurse; she saw how much of a positive impact nurses can have on patients
- Different types of seizures occur with epilepsy; they can occur at any time, and you have no control over them - emotional impact of epilepsy is as bad as the physical part
- Meg’s camp brings kids with epilepsy together to do regular camp activities, including the zip line, rock wall, shooting bow and arrows, catching fish, and being on a boat
- Camp YouCan benefits parents; allows them to leave their kids in a safe environment
- Initially, Meg asked a local organization to help publicize the camp, which allowed her to operate it under another non-profit and use the other foundation’s tax ID number
- Meg parted ways with the other non-profit and achieved a 501(c)(3) status for Camp YouCan to control decisions on what to do with money raised and what activities to offer
- Start with an idea, believe in yourself, and find the right people to help you achieve your goal; don’t bombard yourself with limiting beliefs and learn from your failures
- Tax reasons to do a non-profit; you can give or raise money and time
Resources
Wednesday Mar 27, 2019
Wednesday Mar 27, 2019
Toby Mathis and Jeff Webb of Anderson Advisors encourage you to look at taxes as something that's enjoyable because it's a very rewarding subject. Learn how to use tax laws to your advantage and put money in your pockets. Do you have a tax question? Submit it to taxtuesday@andersonadvisors.
Highlights/Topics:
- What happens if I forget to submit Form 8606? You don’t have to file a return if you let the IRS know there’s something you put in, but you are not taking a tax deduction for it
- What principle assets should I use for my LLC, if I work from home? Depends on where you set up the LLC; a physical address, but not your home address, as principal address
- Can paying my minor kids for their work in my business offset taxes? Yes, if they do something of value; shift money from a higher bracket to someone in a lower bracket
- How can we pay kids? Is there a limit? If you're a sole proprietor, you don't have to put them through payroll; if you're anything else, you do put them on the payroll
- Can I pay my parents for babysitting? Yes, but you're not going to write that off because it’s not an expense
- Do I have to file tax through each state where I own a rental property? If you're making money in a state, you must report that income somewhere
- Can a self-directed 401(k) invest in an opportunity property? Self-directed IRA means you don't have to have a custodian; you can be your own administrator or trustee
- Can I invest in opportunity property? Yes. Opportunities zones and opportunity funds get the tax exemption; you can invest in those areas and defer capital gains
- What documents need to be filed for a C Corp? Depends if you're filing it with the state, then there’s three areas to be aware of: State, third parties, and federal government
- Do you need a real estate license to be considered a real estate professional? No.
- What is a good IRA platform to use, has the lowest fees? IRA Club
- Is partnership income in an IRA required to be income taxed? No. An IRA owning a partnership doesn’t pay tax on that income
- Do you lose long-term capital gains being a real estate professional? No. Capital gains are capital gains; you don't lose them because the losses aren’t considered passive
- Do kids pay FICA taxes? If it's payroll, yes; they're not going to pay on employment taxes
- What are the main tax advantages of a C Corp? Separate tax bracket and fringe benefits that are not taxable to you and not available through others
- I have a home office in the basement. Is that basement going to be deducted? Yes, if you’re a sole proprietor; have an accountable plan and reimburse yourself by determining how much square feet of the house you're using
- I formed a single-member LLC. What tax form do I report? You don't; it's disregarded
- What's the best bookkeeping system for real estate investors and financial services corps? QuickBooks
For all questions/answers discussed, sign up to be a Platinum member to view the replay!
Resources
Section 280A: Home Office Deduction Rules
It's not a dream: My Pillow hit for $1.1 million in unpaid NY sales tax
Family Owned Non-Corporate Entity (FONCE)
Qualified Retirement Plan (QRP)
Anderson Advisors Tax and Asset Protection Event
Get Access to all 3 of our Tax-Wise Workshop Livestreams in 2019
Wednesday Mar 20, 2019
Wednesday Mar 20, 2019
Ready to join Toby Mathis and Jeff Webb of Anderson Advisors for a fun Tax Tuesday in the middle of tax season? Do you have a tax question? Submit it to taxtuesday@andersonadvisors.
Highlights/Topics:
- Do I have to 1099 a hard money lender for interest payments? No, hard money is for a property mortgage, so use Form 1098
- How do I list a shareholder on my 1120, if I am a C Corp? Ignore the LLC and remove it; list yourself as a shareholder because you’re the owner
- If 501(c)(3) provides housing for veterans, can I hold homes in separate LLCs under the non-profit? Even if your 501(c)(3) provides housing, it doesn’t need to own the property; you could own houses in a for-profit LLC and rent or give them to the 501(c)(3)
- What is an RMD? Required minimum distribution for deferred retirement account; you put money in tax deferred and write it off against your taxes
- Are RMDs added to adjusted gross income? Yes, they are taxable as retirement income; give RMD directly to charity to not make your social security more taxable
- Who can open up an HSA account that allows us to invest proceeds into alternative investments in real estate notes? You can go to almost any bank, including Mellon
- What things can be listed as a liability for business? Any loans - anything you owe to a third party or shareholder
- How do I file my C Corp with 50/50 partnership? C Corp files Form 1120; if you haven’t made money yet, it'll all be expenses - offset losses to not pay tax in the future
- With the new Schedule A rules, I’ve heard that since mortgage interest probably isn't usable for most of us, is HELOC interest deductible elsewhere? Mortgage interest is still deductible up to $750,000, if used for acquisition indebtedness
- Any changes in how donations to charities are handled in 2019 compared to 2018? Same rules apply; 60% of adjusted gross income can be offset on Schedule A
- I don't want to take profit from a house. Can I transfer the house to another LLC, and the other house can do the lending or funding? Yes, you can always borrow money on a piece of property without having to trigger a tax
- Where do I write fees for LLC state renewal and registration fees on my tax form? There's a couple places; on the taxes and licenses line, or in other deductions
- Are there opportunity zone funds to invest in with similar tax deferral? Absolutely, that’s what big brokerage houses are doing; defer your money
- I hold a recreational property in LLC. Can I claim special assessments for the property as a loss against sources of income outside the LLC? It depends on how that LLC is taxed
- On Form 5500, do you not need to file it if it’s less than $250,000? If you have a retirement plan less than $250,000, married and filing jointly, don’t worry about it
- Formed an LLC in Wyoming, taxed as a partnership, I have no activities or expenses besides formation cost. Do I need to file the tax as a partnership? Yes, but you don’t have to file a partnership return, if there was no income or expenses to report
- If Airplane A leaves New York, heading west at 11 a.m. EST and Plane B leaves San Francisco at 6 a.m. PST, can I get an extension on filing for my corporation until Oct. 15? No, but if it’s an S Corp, you get until Sept. 15; if it’s a C Corp, it depends on its tax years
For all questions/answers discussed, sign up to be a Platinum member to view the replay!
Resources
Home Equity Line of Credit (HELOC)
Tragedy Assistance Program for Survivors (TAPS)
Wednesday Mar 13, 2019
Wednesday Mar 13, 2019
Some people are very interested in protecting the environment. Some want to protect their land to make sure it’s not altered from its true nature. Toby Mathis is joined by Tyler Surat, who works in the alternative energy sources industry. Tyler helps farmers and others with the conservation and preservation of their land by creating easements. They discuss the “ins and outs” of conservation easements, which involve tax credits and benefits.
Highlights/Topics:
- History of Conservation Easements: U.S. government trades tax for land to incentivize people for conservation via a deduction on donated land based on its asset value
- If you don’t have land to donate or your land isn’t worth anything, find people who do and only want a portion of the tax deduction
- Landowner raises money by having other people buy into a partnership to put a conservation easement on the property and have rights to the land
- Example: Investor/partner gives $100,000 and gets a $400,000 tax deduction
- Landowner has three options: Do nothing, develop land, or conserve it
- Limitations: 60% of adjusted gross income with federal donations and can carry forward unused portion (i.e., a a $200,000 benefit for $100,000 investment)
- Deal with reputable entities; know who you’re dealing with and how they create the lead
- Avoid investing in properties with no developmental value; invest in aggregate types of conservations that hold their value
- IRS is aware of abuse where investors who make most of the income in the United States try to mitigate their tax liability
- Investors get 4.5-5 multipliers, a $5 deduction for every $1 donated; for the IRS to audit that deduction on your personal tax return, it would have to question the entity/easement
- If you want to go green, have a tax appetite, or need an investment strategy, the IRS offers a 30% tax credit for solar or any other renewable energy
Resources
Tyler Surat’s Phone Number: 719-580-3051
Schedule A - Charitable Deduction
Residential Energy Credit: Instructions for Form 5695 (2018)
Wednesday Mar 06, 2019
Wednesday Mar 06, 2019
Toby Mathis and Jeff Webb of Anderson Advisors help people do the best they can with what they’ve got and keep as much money in their pockets as possible by answering their tax questions. Do you have a tax question? Submit it to taxtuesday@andersonadvisors.
Highlights/Topics:
- We inherited farmland real estate that we rent to tenants per a crop-share agreement. Do we get the 20% write-off? Yes. Rental income is subject to a 20% deduction
- I’m a realtor and make edible baskets for clients. Can I write off these expenses as advertising? Write off $25 per person per year for the baskets
- Are holding companies only for rental LLCs or can they hold an active business LLC? A holding LLC is for LLCs in different states/assets, and to make a single entity for taxation
- What taxes must revocable trust beneficiaries pay upon distribution? Grantor who funded trust owns the assets; income from the trust is taxable to them, not the beneficiary
- Which IRA with checking privileges do you recommend? IRA Club; if you want check writing privileges in an IRA, it’s better to do a 401(k) and not have a custodian
- If I open an account as a trader in a personal property trust, what’s the LLC’s role? The personal property trust is used because brokerage houses call you a professional trader and charge extra fees; LLC needs to be a partnership to write off expenses
- Are expenses (utilities, insurance, and homeowner’s dues) deductible for a C Corp? Business-related expenses are deductible to a C Corp under an accountable plan
- Can a S Corp shareholder deduct personal health insurance? You can’t reimburse your own health insurance, but you can deduct premiums as income on your W2
- Do most land easement syndications offer three-five deductions? Companies get together, buy a property, and give air rights/restrictions on buildings; you can get three-five times the investment - invest $1, get a $9 deduction, but that’s aggressive
- The standard deduction was basically doubled, will the tax burden lessen by 50%? No, the standard deduction is what you take or itemize; standard deduction went up, and took away all exemptions and exclusions
- I’m on research landscaping. If I’m not being taxed as an S Corp and my kids work for the business, should I issue each of them a 1099? Yes, hire them and give them a 1099
- What’s the benefit of parents doing IRS paperwork to declare a $15,000 annual gift exclusion? Don’t file it; $15,000 and under is what you can give without reporting it
- Clarify an accountable plan that includes corporation directors not taking a salary? Officers are considered employees by being around directors presumed to be employees; do an accountable plan with the director, but identify what they’re doing
- My C Corp didn’t do any business this year. Do I have to file a return? Yes, C and S Corps have to file a return every year of their own existence
- What are the top deductions eliminated for 2018, with the exception of the SALT limitation? Exclusions, personal exemptions, miscellaneous itemized deductions, and entertainment expenses
- What’s the best way to get precious metal holdings into an OJ retirement plan, meaning what entity is needed? Self-directed IRAs or self-directed 401(k) primarily because banks hate hard assets
For all questions/answers discussed, sign up to be a Platinum member to view the replay!
Resources
Tax Information for Corporations
Rollover Business Startup (ROBS)
Tax Information for Charities and Other Non-profits