All Forum Posts by: Benjamin Weinhart

Hi Moshin, like Zach said, it really depends on what you're paying for and your specific situation. Bigger firms may charge higher fees but they also come with a lot more support and items in house. I also would charge less if that's all that's going on, but there may be other factors at play which is causing the fee to increase as well, I'm also a single member firm owner in LCOL midwest, so that plays into things as well. There could also be other factors at play too such as speed/ease of communication and promptness of filing. There is no one set price that's seen as an industry standard. Rather, it's set by what the CPA believes that their time is worth based on the services that they provide. 

If you're ever unsure about the fee you're paying now, I would encourage you to seek out a few different CPAs to get quotes from them to see if you could be paying less elsewhere, or confirm that you're already at/near a good value. Do keep in mind as well that there may be a value placed on a more long-standing relationship with one person/firm as they'd have a better picture of your situation overall.

I feel I have something more to add more conceptually that may help people reading this in the future to see that this can be a great strategy to deploy. I agree that the gain could have potentially been offset by utilizing various different methods such as a Sec. 1031 exchange, but this would've just kicked the tax can down the road further (except for death which is a whole other topic). 

I wanted to mention that strategies just like these are commonly utilized by the ultra wealthy in order to do a number of different things. I commonly hear in the media about, for example, Elon Musk taking a large amount of personal debt to finance his deal with Twitter. He could have easily sold his Tesla shares instead to fund the deal, but by taking on debt and using them as collateral, one of the things he is doing is avoiding the taxable event that would otherwise happen if he sold the stock, and getting what is probably an extremely low interest rate for the loan. Other people may do deals like these to just fund their lifestyle/passion projects. Just some examples of how effective tax planning can really come in handy as you may start scaling up further.

Hi Michael,

Anything over a 20 year depreciable tax life is ineligible for bonus depreciation under Sec. 168(k). This would include buying any property as both property types are well over this limit for useful life. Leasehold improvements or other property improvements such as interior home renovations would be eligible to take bonus, but exterior improvements such as a new driveway would not be. There would also be a mismatch at the state level depending on which state you're looking at since some conform to the federal rules, some have their own, and some ignore it entirely. I would recommend speaking with your tax professional in order to determine what the best course of action would be for you if you're looking into some new ventures.

Thanks!

Hi Shannon,

Given that we are accountants/CPAs, it's against the ToS on BP to advertise/promote our services. That being said, I think it's good that you see the limitations with the professional you're currently working with. Now that you've expanded into a new venture, it's only natural that certain people are better suited to certain activities than others and a good accountant is no exception. I wouldn't want someone who only deals in big corporations to help me with a trust return for example.

As is commonly said on these forums, pricing lessens if you are willing to work with a remote professional. The only caveat with that though is that local tax can be especially tricky for professionals to navigate as many don't even know that they exist given that they only exist in a few states for income tax. Those states being OR, MI, KY...and most of all...Ohio (I left out a few). I say this to say that if you choose to go the remote route, be sure to find a professional who can help you navigate these localities given that you're also a fellow Ohioan.

I would suggest looking around on various professional posters here and in the business search to both see what they post as well as their profiles might match what you're looking for. If you think so, go ahead and reach out! From a cost perspective, do also keep in mind that it may be worth it to pay a few extra bucks for someone you're looking to build a long-term relationship with if you really think you are a good match with them. Hope it helps!

Hi @Yuki Nowak,

Others have spoken on typical advantages of why working with a remote preparer may be beneficial but I can speak to the fees portion myself. Of course, going with a huge national firm such as Deloitte, EY, BDO, etc would charge in the thousands at minimum for many of their clients, but you also get all of their very substantial resources. 

However, you almost definitely don't need all of that and you may be better served by browsing through various CPAs who post on the forums/in the businesses search section. Also, another reason why remote may be more helpful is that a CPA who works remote from a lower cost of living area may have lower fees than someone based in central Manhattan for example. This isn't true all of the time of course, but I've seen it to generally be the case. Hope I helped!

Hi Lahiru,

Great question, if your wife has been considered to meet the threshold for "Material Participation" in the business, then you would be able to take these losses. There is also an up to $25,000 allowance if she doesn't quite meet the material participation threshold, but is still considered to actively participate. This allowance does have a phase out related to your income, so it would vary depending on you and your wife's specific circumstance. IRS Publication 925 goes into more detail about this.

If you aren't able to qualify for either, you still do get advantages in that you would be allowed to carryforward these passive losses to a future year to offset future passive gains. These are reported and "retained" on IRS Form 8582.

Of course, if you are unsure or would like additional guidance in determining what might fit your specific situation, please reach out to a CPA/Tax Professional who may be able to assist. Thanks!

Hi Michael,

As Jonathan said, I think you are thinking much more into this than what is required. You'll need to be able to substantiate your status if you're ever questioned about it, but it sounds like you're really good at record-keeping already, so that shouldn't be an issue. All you would need to say really is that you materially participated in the business during the tax year and just be prepared in the case of an audit/IRS notice.

Hi Sebastian, it may not be advisable to form your LLC in California if the principal place of business is not located within California. This would avoid the $800+ LLC fee so long as you can avoid the classification of "doing business" within California. Since your in-laws own the condo, it seems like the easiest solution would be for what you first suggested in receiving compensation via form 1099. I personally cannot see a reason for an LLC for a management agreement as it doesn't really mean a whole lot from a tax perspective assuming it's a single-member LLC.

Hi Brian, great question. Effectively, you would claim depreciation for a portion of the year depending on how you set things up initially during the year you purchased the property. For recapture, this could also vary due to a couple of factors. Summarizing/simplifing a bit, assuming you sold for greater than you initially bought for, you would have depreciation recapture for all of 2023. All of this will be reported together on your tax return. Unfortunately, you cannot ignore depreciation rules for 2023 even though you sold the property. I would suggest getting with a tax professional to assist you since there's a lot of variability depending on your specific situation not only on a federal level, but with state reporting as well.

Joseph is correct, to qualify for a like-kind exchange, you'd need to use the proceeds of the sale to purchase similar property within a reasonable timeframe in order to not recognize a gain from the sale.