All Forum Posts by: Bruce D. Kowal

For what it's worth, those capital losses can be carried forward to offset capital gains in the future.  So if you plan on buying and selling real estate, those losses could help.   As for now, I feel your pain.  Your so=called advisor should have protected your portfolio by hedging, such as buying puts and financing that with selling covered calls.  If he held himself out as something other than he was, I'd sue him.  For example, if he said he was a Certified Financial Planner etc.  Is he a registered rep?  Does he have a securities license?  File a complaint with FINRA.  Did he follow the profile you outlined when you engaged him?   Your stated risk tolerance?

Step back and ponder that right now most real estate markets are at their peak.  Who buys at the top?  

Keep your powder dry and wait for other investors to scream in pain.  Then you sweep in and buy.

Waiting beats losing money.

Also, if you love real estate, consider that an REIT in ETF form returns around 8.5% after tax annually. That should be your benchmark. It's liquid and requires no management. If you can't beat that, then sit out.

if this is your first STR, then a guide from HR Block may be helpful: https://www.hrblock.com/tax-ce...

If you have time, a highlighter and pencil, ready to take notes, this is an excellent article:

Real Estate Professionals: Avoiding the Passive Activities Loss Rules

In particular this summary of a Tax Court case:  "In Vandegrift, the taxpayer was employed as a salesman at a salary of $120,000. Despite his outside employment, he maintained that he was a real estate professional who spent more than 50% of his time and more than 750 hours on real estate activities. Because he did not maintain contemporaneous records of his time and did not submit any other records to verify his estimate of his time spent as a salesman or as a real estate businessman, he did not establish that he was a real estate professional. "

Moral: keep good records.   For an example of good record-keeping read this:  Birdsong v. CIR

Your last point deals with the Active Participation exemption for Investors whose Modified Adjusted Gross Income ranges from $100,000 to $150,000.  Those investors can take up to $25,000 in losses as long as they participate in management. 

Don't confuse Active Participation with Material Participation.

Mr. Rioja, if you are bright enough to properly phrase the question, then you should not have a problem reading the suggested article, understanding it, and applying to your own unique facts and circumstances.

[My Daughters both graduated from UT Austin.  Celebrated at The Salt Lick.  BYOB and great brisket.  Fond memories.  Do they still have the speed trap in Selma?]

Keep in mind that real estate prices are at a cyclical high, and interest rates are also high.  If you decide to redeploy your proceeds you will be doing so at the top of the market ... just think about that before you do anything overly complicated and hasty.   There is an intangible premium to sitting on cash, despite the ravages of inflation.  That premium is the ability to swoop down and get a property from an Owner desperate to sell.  IMHO that premium outweighs 8% annual inflation.

Try talking to commercial real estate brokers.  Tell them that you have pile of cash for use to buy property at fire sale prices.  And that you will pay their commission, instead of the Seller.  See what kind of response you get.

 It was cited today in the WSJ with respect to cryptocurrency holdings.  Can someone who lost money hold the bitcoin miner's responsible under security laws.  

Three partners will own equal shares in each entity?  Are the all the Partners US residents?  No Foreign Nationals?  That affects S Corp status.  If this is your first venture into the RALF business, you might want to join a trade association, and see what others have done.  Ask questions of the Staff, find articles already published on this.  Maybe there is a local Florida trade association.  Pick brains freely for this.

Oh, yeah!  She pays tax to California on CA -source income.  That would be a Non-resident tax return.   And she files her PA tax return, because PA is her tax domicile.  But she will not be double-taxed, as PA will give her a credit for the tax paid to CA.

https://revenue-pa.custhelp.co...

You have a "Client"?  Are you an Attorney?

If you are using TurboTax, why not model this?  Input the data and see what comes out.  If you are asking for a tax professional to do the work for you, with no compensation, then you will get what you pay for.

Check with the North Carolina Society of CPA's.  https://www.ncacpa.org/about/c...