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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
Thursday Apr 11, 2024
Thursday Apr 11, 2024
In this episode, Toby Mathis, Esq. chats with Jeffrey Cottle, Esq., Senior Attorney at Anderson Business Advisors, about the world of house flipping, with a focus on how to handle the tax implications. It emphasizes the importance of avoiding "dealer" status with the IRS and explores strategies like asset protection. Toby and Jeff discuss limitations placed on frequent flippers and analyze the pros and cons of different business structures like LLCs, C-Corps, and S-Corps. It concludes by examining the most common scenarios Jeff encounters at Anderson Advisors when working with house flippers.
Highlights/Topics:
- Jeff Cottle intro
- Flipping all comes down to ‘intent’ with the IRS
- Avoid “dealer” status, and consider asset protection when flipping
- 1031 exchanges, installment sales are not available to dealers
- Flipping risks increase with each new property you purchase
- Pros and cons to LLCs, C-Corps, S-Corps
- What is the “typical” scenario Jeff sees for flippers?
- Send us your questions and ideas for future show topics!
Resources:
Schedule Your FREE Strategy Session
https://andersonadvisors.com/ss/?utm_source=aba&utm_medium=podcast&utm_content=how-to-structure-your-real-estate-flipping
https://www.linkedin.com/in/jeffrey-cottle-019a75a2/
https://andersonadvisors.com/
https://www.youtube.com/c/tobymathisesq
Tuesday Apr 02, 2024
Tuesday Apr 02, 2024
In this episode, Toby Mathis, Esq., and Eliot Thomas, Esq., bring more of their tax knowledge to the masses, answering questions on HSA contributions, employing your children in your business, and keeping your assets in a self-directed IRA. Be sure to check out our FREE virtual events happening this month. Submit your tax question to taxtuesday@andersonadvisors.
Highlights/Topics:
- "For an LLC that opted to be taxed as an escort is it better to not just. the profits and let retained earnings grow on the balance sheet and invest retained earnings in stocks or other investments in the name of the LLC? - the profits are automatically going to come down to hit your return. You're going to have to pay tax on those
- "I am considering signing up with Anderson and contemplating having you amend the last three years as I don't think my CPAs or TurboTax gave me all the write-offs that I was eligible for as a real estate investor.I think I may qualify for a greater return, but also don't want to automatically trigger an audit. - the “triggering an audit” that's, I think, a really common scare tactic that's out there…amending is not going to create an audit.
- "Can I continue funding an HSA account if I am no longer employed by the company that offered it but still have the account? Does it make sense to place it into a HSA investment account? - You certainly can continue with that HSA. Even if it's an employer-sponsored HSA, it is the employee's property, should they choose to leave.
- "I have a K1 that will be late from the sale of an apartment complex in Georgia. I am a married filing separately tax payer. I will do an extension but still have to pay tax in April How do I know how much to pay without the K1? I Went through a similar sale last tax season and had to pay a late fee due to the late K-1. I'd like to avoid that again.- There is a safe harbor. If you've paid in at least 90 % of what will be due during your time period before April 15th,
- "What are the benefits of having children as employees? Are there education expenses eligible for payment by the company? - if kids are paid underneath the standard deduction for that particular year, then there's no federal income tax on it. There are many benefits to shifting income to your children.
- "If we live in our rental house for two of the prior five years to avoid full taxation on capital gain, take advantage of the $500,000 exemption for married joint-filing, can the remaining amount that we, remaining amount we will pay in taxes be offset? Can the remaining amount we will pay in taxes be offset by losses in our other rental properties? Capital if we qualify as real estate professionals during the year for filing. For example, if we purchase another property, and cost seg it, can those potential deductions be used to offset the taxes paid on the primary residence sale? - As long as they're in there for two of the last five years, they are eligible for ownership and use.
- "How long do I need to have a property in service to rent to be able to deduct bonus depreciation from a cost segregation study? - you want to be reasonable, probably a reasonable amount of time, but if it was available for rent. That's it!
- "My asset is in a self-directed IRA, so when you see SDR at IRA, that means self-directed. I am assuming if I sell it, the money is considered income and I'm taxed on it like any other income. Also, if I use the money from the sale of that property for the purchase of a different property, not kept in the self-directed IRA, can I avoid taxes? What is your suggestion in this type of situation? - there's a whole lot of misconception going on in this question. So no, we are not taxed on it like any other income. It's quite the opposite.
- "Just started an ink taxes as C Corp What is an accountable plan? Is it something I need to join before I can get the benefit of it? Can any reimbursement be an expense with my personal name and get reimbursement like health dental vision cell phone, etc Do I need to have my cell phone account in the business name? - an accountable plan just means reimbursement. It's a fancy IRS term.
- "Does the assignment of beneficial interest in a land trust count as an installment sale for tax purposes? Who's responsible for the property taxes in such a transaction? - another one with some misunderstanding here.
Resources:
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=aba&utm_medium=podcast&utm_content=can-i-contribute-to-my-health-savings-account-after-leaving-my-employer
https://andersonadvisors.com/
https://www.youtube.com/@TobyMathis
https://www.tiktok.com/@tobymathisesq
https://www.youtube.com/@ClintCoons
Thursday Mar 21, 2024
Thursday Mar 21, 2024
Today Toby Mathis, Esq. speaks with Karim Hanafy, Esq., Anderson’s non-profit expert, about the top ten types of non-profits you can form to access tax benefits for your charitable activities. These range from familiar causes like humanitarian aid (both domestic and international) to education (including scholarships) and even combating social issues through activities and therapy animals. Research, veteran/elderly assistance, and various housing needs rank high, as well as animal welfare, environmental causes, and empowering communities. Finally, the importance of supporting other nonprofits, regardless of their specific cause, is also an option.
Highlights/Topics:
- Karim’s background/expertise in non-profits
- Top ten types of nonprofits
- Humanitarian relief - domestic/international - food, clothing, shelter, medical care, housing
- Education and scholarships- trade schools etc.
- Activities to combat obesity, depression, and isolation - social and outdoor activities, therapeutic animals
- Research - medical and financial support
- Assistance for veterans and the elderly- medical, counseling, jobs, housing
- Housing - this used to be number one - recovery from abuse, elderly, vets, under-resourced
- Animals - sanctuaries, animal therapy programs
- Miscellaneous - pollution, ministries, waste reduction, empowering the underserved, disaster relief
- International giving - orphanages, food, clothing, shelter, animal sanctuaries, clean water
- Supporting any of the above activities, or supporting other organizations that provide the previous support
Resources:
Email Our Team To Get Your Nonprofit Started
Schedule Your Free Strategy Session
Tuesday Mar 19, 2024
Tuesday Mar 19, 2024
Welcome to episode #214 of the Anderson Business Advisors podcast. Today, experts Toby Mathis, Esq., and Eliot Thomas, Esq., explain tax strategies for common questions concerning how to write off business travel that includes personal days (hint: business days have to be more than 50% of your trip), how and when you can qualify as a real estate professional, investing in real estate from your investment accounts, and some of the helpful tax benefits of creating and using a Health Savings Account.
Submit your tax question to taxtuesday@andersonadvisors.
Highlights/Topics:
- "Can I deduct travel expenses to rehab rent rentals that are in other states than my primary residence?" - Yes, but you have to spend more days doing work (more than 50%) than personal days.
- "If we convert our traditional IRA to a Roth IRA with the same provider, do we have to file any forms with the tax return or otherwise? If so, what forms?" - You’ll receive a 1099R - the converted amount is taxable.
- "Do we have to make the REPS election every year? And how do we make the election?" – That's real estate professional status. Does one spouse qualify? Is he/she spending 750+ hours on the business?
- "Last year we neglected to register as real estate professionals. We ended up owing a substantial amount in taxes. Can we register as real estate professionals this year and carry over the expenses that were disallowed for 2022 and 2023?" –in '23, if we make the status and we, the real estate professional status and we aggregated, we got everything done properly in return, it's not gonna help us. for those prior losses.
- "For Augusta rule payments, what documentation is required beyond meeting minutes? Do I just write myself a check? Should Augusta rule go in the memo? Do I need to send myself an invoice? I am the owner and employee of an S-corporation?" – You always want to send an invoice. I would recommend it. You want to have that paper trail.
- "Can investment income be used to fund a health savings account? The deductibles are so high. We are always paying out of pocket." - So you don't need any type of specific income to fund an HSA health savings account. Limits for 2023 are 7750 for a family, 3850 for an individual.
- "I plan to buy a rental property using my 401(k). I'm 65 and set up my solo 401(k) for rollover. My question is, if I convert to a Roth 401(k) and purchase the rental, does the rental income and future equity gain become tax-free?" – Yes, it does, that's a quick answer.
- "Should I have my rental income funneled into an LLC, business, or corporation to save money in taxes?" - how is it taxed? And it can be what we call disregarded, which means it's taxed. Could be a partnership, could be an S corp, could be a C corporation, and all those have different answers.
- "What are the tax and legal benefits of making an owner loan to my LLC rather than capital contributions?" - just like the last question, how is that LLC taxed? We would do something different, perhaps if it was a disregarded entity or partnership versus an S -corp or a C -corp. They can all have different outcomes depending on how we do it.
- "Can you write off 100% of your trip to Las Vegas all expenses? I'm a realtor licensed in both Nevada and California. Any other tax deductions?" - You're going to have to qualify it as business travel. That means more days of business than anything else…
Resources:
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=aba&utm_medium=podcast&utm_content=write-off-travel-expenses
https://andersonadvisors.com/
https://www.youtube.com/@TobyMathis
https://www.tiktok.com/@tobymathisesq
https://www.youtube.com/@ClintCoons
Thursday Mar 14, 2024
Thursday Mar 14, 2024
In this episode, Toby Mathis, Esq. chats with fellow attorney John Anderson, Esq. of Anderson Business Advisors about the pros and cons of establishing trusts in Nevada. The discussion digs into Nevada trusts' specific functions and benefits, including the "seasoning period" and the role of trustees. Toby and John explore how a third-party trustee can offer protection, methods for withdrawing funds, and the power of appointment in Nevada trusts. Additionally, they touch upon safeguarding your home with a trust, using a trust for essential expenses, and the potential risks of insolvency and bankruptcy. The conversation highlights the likelihood of lawsuits settling against a Nevada trust while acknowledging the absence of tax advantages.
Highlights/Topics:
- Trusts - to revocable or irrevocable?
- Advantages to setting up trusts in Nevada and South Dakota
- The “seasoning” period
- Trustees and their functions in these states
- Protection through a third-party trustee
- Filing taxes and withdrawing money - Nevada trusts
- Power of appointment
- Protecting your home with a Nevada trust
- Using an asset protection trust to pay for essentials
- Risks of voluntary insolvency and bankruptcy
- Most lawsuits will choose to settle against a Nevada trust
- Tax advantages - there aren’t many
- Pro-rata vs. non-pro-rata
- A high-profile divorce case with a Nevada trust, and the outcome
- Not subject to the Corporate Transparency Act
- Setting up a Nevada trust, statute of limitations
Resources:
Email John Anderson for a consult
estateplanning@andersonadvisors.com
https://andersonadvisors.com/
https://www.youtube.com/channel/UCaL-wApuVYi2Va5dWzyTYVw
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=aba&utm_medium=podcast&utm_content=how-to-form-a-nevada-asset-protection-trust
https://www.youtube.com/c/tobymathisesq
https://andersonadvisors.com/
Tuesday Mar 12, 2024
Tuesday Mar 12, 2024
Clint Coons, Esq. and Greg Helbeck from Velocity Home Buyers tear down the facade that wholesaling is a no-risk investment, exposing the legal snares and fiscal sinkholes that might just catch you off-guard. Hear about Greg's near-miss disaster when a contracted property burned to the ground, a story that underscores the need for bulletproof business strategies to safeguard your ventures against the unpredictable foibles of real estate.
Lastly, we traverse the digital landscape of virtual real estate, covering the essentials for managing sales and renovations without once stepping foot on the property. There's a treasure trove of insights on direct mail marketing too, proving the worth of printed marketing in a world enamored with digital solutions. Whether you're looking to hone your marketing tactics or fine-tune your remote investment strategies, this episode is a vault of expertise for any wholesaler eager to secure a fortune in the ever-evolving real estate market.
Highlights/Topics:
- What is wholesaling and why is it so appealing?
- Greg’s hair-raising wholesale tale of woe
- Structuring deals through an LLC
- Other risks in real estate contracts
- Wholesaling across state lines
- Motivation behind seller's decision
- Direct mail marketing strategies for success
- Success through uncomfortable actions
Resources:
https://www.instagram.com/grego_37/
https://www.velocityhousebuyers.com/
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=aba&utm_medium=podcast&utm_content=how-to-wholesale-real-estate
https://andersonadvisors.com/
https://andersonadvisors.com/podcast/
https://www.youtube.com/channel/UC5GX-U6VbvMkhSM1ONBiW8w
Thursday Mar 07, 2024
Thursday Mar 07, 2024
Clint Coons, Esq. speaks with Kenji and Letizia Alto, who are both MDs and founders of Semi-Retired MD. They share their journey from being high-income physicians to achieving financial freedom through real estate investing. The episode delves into the mindset shifts required to excel in the property market, overcoming common obstacles, and utilizing strategic tax benefits. The couple also introduces their new fable-like book, contrasting the financial paths of two couples. You’ll hear about building a strong investment team, identifying hidden equity, and leveraging techniques like cash-out refinancing and 1031 exchanges to maximize returns and accelerate the journey toward financial independence.
Highlights/Topics:
- Kenji and Leti's journey from physicians to real estate investors
- Mindset shifts essential for real estate success and tax reduction
- Introduction to Kenji and Leti's book
- Overcoming fears and hurdles in out-of-state multifamily investments
- Building a strong team for informed decision-making in real estate
- Hidden equity and trusting instincts for better returns
- Real estate for significant tax benefits and wealth growth
- Profiting from real estate through various streams like cash flow
- “Lazy equity” via cash-out refinancing and 1031 exchanges
- Fast FIRE concept for accelerated financial independence
- Resources for high-income earners
Resources:
https://www.amazon.com/Life-Your-Terms-Investments-Themselves/dp/154453096X
https://podcasts.apple.com/us/podcast/rich-doc-poor-doc/id1506849313
https://www.facebook.com/semiretiredmd/
https://www.youtube.com/channel/UCibjmeDUNn568Egl5TppnPg
https://www.instagram.com/semiretiredmd/?hl=en
https://semiretiredmd.com/
https://www.linkedin.com/company/semi-retired-md/
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=aba&utm_medium=podcast&utm_content=investing-in-cashflowing-rentals
https://andersonadvisors.com/
https://andersonadvisors.com/podcast/
https://www.youtube.com/channel/UC5GX-U6VbvMkhSM1ONBiW8w
Tuesday Mar 05, 2024
Tuesday Mar 05, 2024
Today, experts Toby Mathis, Esq., and Elliot Thomas, Esq., explain valuable tax strategies for real estate investors, traders, and various income earners. You’ll hear about the optimal tax classifications for short-term rentals, using retirement funds for real estate investment, and the transition from W-2 to 1099 income for tax benefits. Additionally, Eliot and Toby discuss maximizing deductions through trading partnerships, the benefits of Health Savings Accounts, vehicle write-offs, and home office deductions. Submit your tax question to taxtuesday@andersonadvisors.
Highlights/Topics:
- Is short -term Airbnb and VRBO (short term rentals) under Schedule C or Schedule E? - if it’s just bare oversight management, etc. That might put it on Schedule E. Schedule C is if you have more substantive activity you're putting into it.
- I was told I could use my company assets of 401k to loan money to buy real estate investment. Is that true? If so, how? - its true, one is allowed to take a loan out by law, if your plan allows for it. If you don’t pay it back it becomes taxable income.
- How how can I position my child's college tuition as a business expense? - let's say your child's handling the bookkeeping for your corporation, and they're taking accounting classes, then you can deduct the classes related to what that child's already doing in the corporation.
- What percentage of gains do I need to pay tax on if I trade for it, if I trade forex and if I put money into a holding LLC? Can I minimize it? - often it's gonna be section 1256, and You get a treat 60% as a long-term capital gain, and the other 40% is gonna be short-term capital gains, which means you're at your ordinary tax bracket rates.
- How do I deduct expenses if I have a W2 and a 1099? - generally speaking, on a W-2, there's nothing you can deduct business-wise against. If you had expenses that you incurred in order to get your W-2 income, they took that section away with the Tax Cut and Jobs Act back in 17.
- I just started my small business of being a mortgage broker. I own a single family rental about an hour from my house. Can I take a tax deduction for mileage expenses if I use my vehicle for both businesses? What about taking deduction on one car for mortgage and take deductions on the other car for the rental property? - We're going to recommend your vehicles be titled in your personal name. Usually we're going to deduct that mileage.
- If I purchased a property to rent it and I have it as an Airbnb and I did a lot of work in 2023, can I claim all the expenses for 2023 tax year, even if the house was not rented at all in 2023 because of work is estimated to be complete in quarter one of 2024. - You can in 2024, but we can't go back to ‘23, when the expenses were incurred, because it wasn't placed in service yet.
- Can I make charitable contributions from my business LLC income and take it as a business tax deduction? Due to the standard deduction, I can't deduct them from my personal return. - If it's a C corporation, then the C corporation can deduct up to 10% of its net income. Used to be 25% during the CARES Act but they've moved it back to the traditional 10% of your net income
- Started regular 15-year depreciation for capital improvement of rental property in 2021, didn't know any better. I switched to bonus depreciation and claimed the remaining amount in 2023. Are any home improvement projects tax deductible? - At its base level, no. But if you happen to have a home office, and you have a C corporation or an S corporation, then any your home improvement projects, yes, they will be deductible in the sense that if it's directly related to the office
Resources:
Free Emergency Estate Planning Kit
https://aba.link/nzj
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=aba&utm_medium=podcast&utm_content=how-to-report-income-from-a-short-term-rental-property
https://andersonadvisors.com/
https://www.youtube.com/@TobyMathis
https://www.tiktok.com/@tobymathisesq
https://www.youtube.com/@ClintCoons
Thursday Feb 22, 2024
Thursday Feb 22, 2024
Have you ever wondered how flipping the script on profit can revolutionize your business? Mike Michalowicz joins Toby Mathis, Esq., to dissect his innovative 'Profit First' formula, a game-changer for entrepreneurs swimming against the tide of traditional financial management. Mike, the sage behind several seminal business books, engages in a no-holds-barred discussion about the essentials of a prospering business—prioritizing profit, pinpointing pressing needs, and strategies for organic growth. You’ll also hear the details of Toby’s own multi-million-dollar tumble and the invaluable lessons that journey taught me, all of which dovetail with Mike's profound insights.
Highlights/Topics:
- Mike intro and background
- Books by the guest and their basic message
- Past failures, “face plants,” losing millions
- Competitive advantages in today’s market
- Camps in the sports industry - employers should take note
- Home Depot’s employment recruiting ‘camps’
- Examples of offering education for recruitment
- What is ‘collective psychological ownership’?
- Using these techniques as an employee
- Company culture- diversity builds community
Resources:
https://allinbymike.com/
https://mikemichalowicz.com/bio/
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=aba&utm_medium=podcast&utm_content=profit-first-and-beyond
https://www.youtube.com/c/tobymathisesq
https://andersonadvisors.com/
Wednesday Feb 21, 2024
Wednesday Feb 21, 2024
This episode of Tax Tuesday, Toby Mathis, Esq., and Eliot Thomas, Esq., cover topics including paying your children from your business, when you can write off meals as “business” - (hint: it all comes down to ‘intent’), and how often you should meet with your CPA. Submit your tax question to taxtuesday@andersonadvisors.
Highlights/Topics:
- "Does my S-corporation where I am the sole owner and sole employee have to issue a 1099 to me as an individual?" - In general, you're S-corporation, you're an employee, so you would get a W-2. It's what we call reasonable income.
- "If my husband and I, both shareholders of our C-corp, discuss business over dinner, are we able to be reimbursed for our meals? Is there a list of reimbursable expenses for employees/owners of C-corps that is easier to read than the tax code?" - If the intent was to talk about business, then generally speaking, you can deduct it
- "Can I sell my solo 401(k) held property, do a 1031 into another investment, and then buy the property back with an LLC?" - first of all, we wouldn't have a 1031 going on with a solo 401(k). We don't have deductions, we just have cash in cash out with our retirement plans.
- "How are taxes handled differently with capital assets versus repairs, maintenance, and labor of rental properties?" - Every time you lay out cash for one of these repairs or labor, that's going to be an immediate deduction for the full amount.
- "How do I get tax benefits from paying my children for doing work in the business?" - basically you can just pay them out whatever entity you have.
- "Are the costs of education specifically related to starting a business deductible, specifically paid webinars or courses taken online. I've read that they are, but apparently many say they are not. Is there some special way to categorize them so that they are deductible?" – If its in a C-corporation or an LLC taxed as a C-corp, we're allowed to deduct the training as training our employees, which you would be an employee of.
- "I recently purchased a small camper trailer to rent out, my camper rental side hustle per se. "Does this type of rental count as an STR, short term rental, as far as taxes are concerned? Some suggest filing Schedule C while others say Schedule E might be more appropriate. We are not going to use this camper personally. It is for rentals." - If you rent it for 14 days or less, you don't have to report it. It's covered under 280A subsection G2. If you rent it for more than 14 days, it is an investment property.
- "If I put my rental properties into an LLC, do I have to file both personal taxes and business taxes?" - how is that LLC taxed? It can be a sole proprietorship. It can be a partnership if we had another member, two or more members. It could be an S-corp, could be a C-corp. All those make a difference.
- "How often should I be meeting with my CPA a year?" - I'm going to really recommend having quarterly meetings with your CPA just to make sure everything's on track.
- "Can I file my taxes for my LLC as a corporation to get a lower tax percentage? I run short term rentals. I host short term rentals for other owners. I also run short term rentals in the properties I own. I have an S-corp with my husband and I work from home. My accountant said, I cannot deduct my home office expens - we never want to put appreciable real estate into a corporation, S or C, if we're holding onto it for a long time.
- "Can someone file their taxes through your company?" - Yes, you can. You have to be a tax client
Resources:
Request a Free Cost Segregation Study
https://andersonadvisors.com/CSA/
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=aba&utm_medium=podcast&utm_content=are-educational-courses-tax-deductible
https://andersonadvisors.com/
https://www.youtube.com/@TobyMathis
https://www.tiktok.com/@tobymathisesq
https://www.youtube.com/@ClintCoons