All Forum Posts by: Alex Yakubovich

Max bonus depreciation in this year is 60%, and in the next, it's 40%. So, do I understand correctly that it is possible to spread it over two years and then just use the property as a permanent residence? Or am I missing something?

Hello everyone,

I have some questions about STR (Short-Term Rentals) and would greatly appreciate your help. Let's consider the Seattle Metropolitan area; an SFH (Single Family Home) would cost around $1M, and the taxable income is $500k.

My questions are as follows:

1. 1. How crazy is the idea of buying an SFH for STR with accelerated depreciation?
2. 2. Would a Cost Segregation Study work well for an SFH?
3. 3. If we purchase this year, would accelerated depreciation apply only to the remaining part of the year or for the entire year?
4. 4. Is it nearly impossible to obtain a mortgage and operate an STR? Would I need to plan to live in the property for one year as my primary residence to qualify for such a mortgage?
5. 5. Would a second home mortgage work for STR? For instance, Rocket Mortgage mentions that a property may qualify as a second home if rented for no more than 180 days in a calendar year. Could I do STR with a second home mortgage?
6. 6. If I am the only one materially participating in STR, can we deduct STR depreciation from my spouse's income if we file taxes jointly?
7. 7. If I opt for a two-unit house instead of an SFH, residing in one unit and using the other for STR, would accelerated depreciation apply only to one unit?

If I have an STR (Short-Term Rental) property and have utilized 100% of the Short-Term Rental Depreciation for that property, what would happen after I execute a 1031 Exchange? Would I be able to claim new Short-Term Rental Depreciation for the new property?
For example, if I had $200k in depreciation on an $800k condo and I did with a 1031 Exchange, acquiring another condo, can I continue claiming Short-Term Rental Depreciation? It seems like an infinite loophole (conducting a 1031 Exchange every two years and subsequently claiming Short-Term Rental Depreciation repeatedly). Or perhaps, am I missing something?

We established an LLC at the beginning of this year, with just two members – my spouse and myself. We reside in a community property state and file our taxes jointly as a married couple.

Throughout this year, we've utilized our LLC to carry out business activities. My spouse has been working on a separate project, having earned about $1k, while I undertook contract work in the IT field, earning roughly $200k.

Both of us were actively involved in the LLC's operations, each contributing more than 500 hours of work (met material participation test). However, we've encountered conflicting information regarding the tax filing status for our LLC and contributions to our 401k plans. Despite consulting with tax advisor, and CPA, we still don't have a definitive answers.

Essentially, we have the following questions:

1) Can we file as a Qualified Joint Venture (QJV)?

Here is the IRS's definition of a QJV (https://www.irs.gov/businesses/small-businesses-self-employed/election-for-married-couples-unincorporated-businesses):

A qualified joint venture is a joint venture that conducts a trade or business where (1) the only members of the joint venture are a married couple who file a joint return, (2) both spouses materially participate in the trade or business, and (3) both spouses elect not to be treated as a partnership. A qualified joint venture, for purposes of this provision, includes only businesses that are owned and operated by spouses as co-owners, and not in the name of a state law entity (including a limited partnership or limited liability company) (See below). Note also that mere joint ownership of property that is not a trade or business does not qualify for the election. The spouses must share the items of income, gain, loss, deduction, and credit in accordance with each spouse's interest in the business. The meaning of “material participation” is the same as under the passive activity loss rules in section 469(h) and the corresponding regulations (see Publication 925, Passive Activity and At-Risk Rules). Note that, except as provided in section 469(c)(7), rental real estate income or loss generally is passive under section 469, even if the material participation rules are satisfied, and filing as a qualified joint venture will not alter the character of passive income or loss.

Does the IRS assume that a QJV can only consist of one business? If my spouse and I have separate activities considered as two businesses, does this mean that we can't be treated as a QJV and should instead file as a partnership?

2) Should we split our taxes equally (50/50 as per Schedule SE) or should it be proportional to our profit margins (my spouse pays taxes on $1k while I pay taxes on $200k)?

3) Can we both contribute to the maximum allowable amount for our 401k plans, which is $66k each, or is my spouse only allowed to contribute $1k, reflecting their earned income?

We also plan to consult with tax attorney but want to gather some feedback first.

Hello. I need to open an LLC (Corp2Corp contact is coming), but I'm not sure in what state to do it. Currently I am located in TX but in 6 months I will relocate to WA.

What option is better:

1) Open LLC in WA ($200 fee) and register a foreign LLC in TX ($750 fee). Also there will be annual fees in WA

2) Open LLC in TX ($300 fee) and register a foreign LLC in WA ($200 fee) when I move there

3) Open LLC in TX ($300 fee) and domesticate it in WA ($200 fee) when I move there. I'm not sure how much I need to spend on it. Probably, at least, I will need to pay for a new registered agent ($150)

I'm not sure how difficult it is to do domestication in comparison with the registration of a foreign LLC

WA has $60 annual fees, and TX has $0 annual fees (for LLCs with less than $1.23 million in revenue, I would probably never reach this number anyway)

Thank you for answers!

I have one more question about the pro-rata rule though.

Let's assume I have tIRA with $16k where $10k is pre-tax money and $6k is after-tax money. Do I have to pay taxes if I transfer $16k from tIRA to Roth IRA and on December 31 I will have tIRA with zero balance? It looks like the pro-rata rule will not work in this case because it should be calculated on Dec 31 where the balance of tIRA is zero for me. On the other hand, from $16k there was $10k pre-tax money. So do I need to pay taxes anyway in this case?

Hello everyone!

Could you please help with my situation? I want to do a Backdoor Roth but I have pre-tax money on my trad IRA and I don't understand whether the pro-rata rule could be avoided if I do the following:

1) All money on my trad IRA is pre-tax.
2) I want to open Solo 401(k) and transfer all pre-tax money (10k) from trad IRA to Solo 401(k).
3) When the balance on trad IRA will be zero I am going to add after-tax money to my trad IRA up to the yearly limit (6k).
4) I am converting all after-tax money from trad IRA to Roth IRA.
5) To the end of the year I will have trad IRA with zero dollars, Solo 401(k) with after-tax money (10k), and Roth IRA with after-tax money (6k).

Will pro-rata rule be avoided if I do 1)-5) in one year?

Thank you very much!