All Forum Posts by: Bruce D. Kowal

Not sure if this link will work:  https://www.meetup.com/find/?l...

Go to Meetup.com.   Sign in.   Put your location as Las Vegas, and in the search box enter Las Vegas.  Let me know how that goes.

A few items here I want to point out.  

[1]  If you already use a CPA/EA , then they have a tax program which is flexible, and he can run a bunch of What-if scenarios for you, for the current year.  A lot of Members have these What-if questions, and frankly, the answers are with your current CPA/EA.   

[2]  This is the time of year for CPA's to run tax projections for their clients, especially if you have a complicated tax return.  Lots of properties and transactions.  Stock market losses too.  If you have unrealized market losses and realized gains from sale of properties, time to plan.  The point is that you should never be surprised when your CPA tells you that you have a balance due.  You should already know that before Jan 15, 2023 at the latest [that's the last day for estimated tax payments without penalty].  

[3]  If you had large gains already this year, and are on salary, you might want start paying taxes on those through increased withholding.  Why?  To avoid the penalty for underpayment of taxes.  i.e.  the Govt like to get its money close to when you earn it, not when you get around to it.  And it turns out that IF you pay taxes through withholding, even though you might have earned it in January [a bonus?], by paying through withholding IRS deems it be timely paid.

If none of this makes sense, let me know. 

If someone is giving you free advice, you will get what you pay for.  Guaranteed!

What the H-ll is Mr. Burke smoking?

While Mr. Murphy is entirely correct, there is a lot of complexity in jumping in as an S-Corp and getting into reasonable compensation issues.  Congress almost did way with this tax dodge in July.  There are some added compliance costs.   You will file two corporate income tax returns, IRS and your State, in addition to your two individual income tax returns.  Those business returns are due on March 15.  And those will require a bookkeeping program such as QuickBooks. You are in the world of double-entry bookkeeping now.

And the big question now is, are you making taxable income from the LLC?

Join a local Meetup group which has local real estate investors.

Read this.  It covers your concerns.  Passive Activity Loss Audit Techniques.

It's written for IRS agents, who are not all the brightest bulbs.

If you are NOT fully prepared to file your 2021 tax return on Monday, October 17, DON'T FILE LATE!!!!!  [IRS calls this "FAILURE TO FILE".  It is not a sexual dysfunction]

What you do is to FILE SOMETHING to the best of your ability, and AMEND the return when you are ready.

You have three years from date of filing to AMEND a tax return.

FILE SOMETHING - best guess.  If you definitely think you will owe tax, well, OVERPAY.  Better to overpay and claim a refund, than to incur the LATE FILING penalty.  

Oh, how much is the LATE FILING penalty?  If you OWE money, it's FIVE PERCENT EACH MONTH to a maximum of 25%.

Or as IRS puts it on its webpage:

The Failure to File Penalty is 5% of the unpaid taxes for each month or part of a month that a tax return is late. The penalty won't exceed 25% of your unpaid taxesT

https://www.irs.gov/payments/f...

And, if you live in a State with income tax, that State will likewise assess a penalty.

So, let's do the math.  If it turns out that you OWE, say, $10,000, well, IRS penalty can be $2,500 and the State, add another $1,000.  Who needs that?  Better to pay a sharp CPA/EA to file something and amend later.

Although, we are very busy as we approach October 17, most CPA's can spare, for a fee, the time to file something reasonable.  Not more than two hours of our time.

Failure to file, or Late Filing is very expensive and completely unnecessary!!!!!!.

Now you know.  And that's why you come to BP.  Right?

Now, I am going back to work . . .

Ah, one last thing.  The same goes for those business returns which were due last month.  Sept 15.  If you have not filed, file SOMETHING NOW before the penalty exceeds one month, and amend later.

I don't see anything special.  The fee is ordinary income.  And the profits from sale are likewise ordinary income, not capital gains, as you do not own the property.  But you get cred from your Parents by being a conscientious and dutiful Son.  And that's worth something . . .

I have never told a Client that paying taxes means that the business is making money.  Not an artful to a Taxpayer's concerns about minimizing taxes.  I have a national practice.  Don't know you exact situation, but here's a suggestion.  Get a PDF copy of your recent tax return, redact your SSN and other info [using the Markup feature of you PDF program, Adobe etc] and send me a copy of the return.  I will take a look at it and see if I can spot any areas where your CPA might be failing.  Realistically, to give you the assurance you want, you will at some point have to let another professional tax a look.   Redact names, kids names,  SSN's and addresses.  Don't send any of the paperwork which reprints bank account, W2 information etc.  Just pages 1 and 2 of the 1040 and the three schedules.  ALso your buisness returns, if they are Sole Proprietorships [Schedule C] and rental income [Schedule E].   Best to you!