All Forum Posts by: Benjamin Weinhart

 Agreed with the top part, especially. The medical w/ itemized deductions is fairly common knowledge and hard to mess up*, but the more important thing is to develop a lasting relationship with someone who you feel you can grow with. It might take a few tries to get it right, but if you can't communicate effectively with your current tax person, it might be time to try a new one.

 At this point, this is more of a wait-and-see what happens. Your guess is as good as anyone else's that's not directly involved with creating the legislation.

 This is subject to speculation as whatever tax law that gets passed this year is almost certainly going to address this one way or the other. My guess though, assuming that QBI doesn't get extended, is that it'll either keep getting carried forward and become a useless extra line item on a tax return to potentially be used in future legislation, or that it'll disappear completely. There's not really any way to know one way or the other without a crystal ball I'm afraid.

1. I'm not too sure about a Captains tax, for that I would refer you to your local seaman :)

Kidding aside, yeah that's fine, assuming you meet the other requirements of Sec. 121 such as not having utilized the exclusion during the two-year period prior to the sale of the property in question, among others. Do note that you will still owe some tax in the form of depreciation recapture for the time that the property was used as a rental property. This amount should be fairly small though (low 4 figures if I had to guess).

2. I'll let someone else speak to the condo part as I'm unfamiliar with those specifically as it relates to Texas. For the tax side of things, the exclusion is available for the "home" meaning that if you sell one and keep the other, you'd have to sell the front lot - but the back lot could also be eligible for the exclusion even if they're sold on separate dates (potentially back lot sold first too), provided it meets a few additional criteria. You'd want to enlist the help of a CPA/EA who can help you plan it out since there's a lot more than the standard 121 exclusion involved if you go this route.

Regardless of your path forward, I encourage you to reach out to a tax professional who can assist and advise with your specific circumstance in order to make it more personalized to you. Also, IRS Publication 523 goes into more detail on this if you wanted some light reading material. :)

 Generally, the downside comes with added complexity with partial disposals among a few other things. 

As for QBI, the current way the law is written is that QBI will expire by 2026 when the TCJA sunsets. However, depending on who you talk to, there's speculation that it may or may not be extended with whatever new legislation gets passed for tax law changes. There's no real harm to keep tracking your hours, so it shouldn't matter too much anyway at this point.

I'll add on to what the other Ben said and mention that there are exceptions based on the # of days that you rent out your home to where the income/expenses are excludable (being lesser of 14 days or 10% of total usage if under 140 personal use days). There's other items such as this where it may be helpful to talk to a CPA/EA for a little tax planning, especially since you'll likely get caught up in the passive activity loss limitations if taking bonus on a single rental property as I often see.

It's also useful to mention that even if you do the cost seg study (I'm assuming you're doing one to be talking about this), you'll still benefit from accelerated depreciation in the form of shorter useful lives on the assets where you received bonus from. With the current language of the statute, after you exhaust Sec. 179 and 168(k), you cannot take them "again" in a future year unless that's part of whatever the new tax bill is going to be. In my personal opinion, I think the return of 100% bonus (or at least expanding 179 a bit) is somewhat likely with the new administration, so it might be worth it to you to hold off on doing anything until things look a little bit more concrete. It's very possible that whatever change might happen won't be in affect until 2026 also.

It's also worth noting that any depreciation taken for the property for rental purposes doesn't become part of the Sec. 121 exclusion should you choose to take that in a future year. You would need to do some kind of 721/1031 exchange in the future if you sell the property before your death to not recognize that gain/recapture.

 Hi Dave, it sounds like you went to someone who has high minimums. This means that even if you had 5 rental properties, for example, they would still give you that quote since they're trying to go after more complex tax returns/clients. If what you say is true, I know my base fee would be roughly half or a third of that for your situation if that helps to give you perspective.

To speak to the other posts in reply to mine, I appreciate the clarification. It seems there's a lot of confusion about the posting rule, so I wonder if that's where much of the inconsistency comes from.

Speaking to your item #6, I was actually told by the staff here over the phone maybe 5-6 months ago that DMing someone is fine so long as it's not a copy/paste ad and is specific to the individual. I was a bit surprised when I heard that, and someone please feel free to correct me if I'm wrong.

Overall, nicely presented, as always! ;)

Only thing to note for anyone who might be reading this later is that you might want a CPA/EA specifically since they're allowed to talk to the IRS on your behalf, whereas the others cannot. There's a few other exceptions such as a tax lawyer, but I find that a lot of folks find comfort in just having me respond to any notices that they might get. This may be a little overkill for some people, however, as many tax accountants will work great for most folks.

I especially agree with #3 as well since a CPA who is an investor might only have one or two long-term rental properties that they've shopped out to a property manager. The majority of our expertise comes from experience and having a specific book of real-estate clients who are involved in a wide variety of activities. For example, when I was in my large public accounting firm days, I worked on a tax return for a client who had $500m+ net revenue over hundreds/thousands of locations across 25+ states. I'm not saying this will never happen to me, but I'd probably be vastly more likely to win the lottery before that happened haha.

I can attest to #8 as well. I'm finishing up the last of my engagement letters for next year and I know many of us will have sporadic availability for tax planning after this week due to the holidays.

I personally think that a lot more happens on the tariff side of things than actual income tax law. I could likely see many things from the TCJA being made permanent, mostly procedural items like the higher standard deduction and child tax credit (Plus eliminating exemptions). I think we may see a return of bonus depreciation, but I doubt that it'd come without a cap of $1-2m, and a repeal of Sec. 179. I could also see 15% corp tax and the whole no tax on tips thing. I'd be surprised if there was anything substantially more than this that took place, and I'd be shocked if it caused anything to change for 2025, only 2026 onwards (for major things that is).

Hi David,

You're correct in that this is the best method to use right out of the gate. It's better as it's much easier to identify expenses and keep everything separate if you use a dedicated business account, and they're usually fairly simple/cheap to create. As for a secondary bank account, it's perfectly normal to use one business checking account for both revenues and expenses and I'd recommend you keep it as so. No sense in creating unnecessary complexity, especially as you're still in the early stages. Just be sure that you're keeping good records on the back-end for bookkeeping and you'll be in good shape!