All Forum Posts by: Bill Walston

Tim Smith, as everyone has already chimed in, your accountant is quite right about the passive loss...it's gone due to your AGI.

He MAY also be right about your mortgage interest. If you are subject to the Alternative Minimum Tax then your mortgage interest is not deductible. There's a flat deduction for folks that fall under the AMT.

Not only that, the Taxpayer Relief Act of 2013 reinstated the personal exemption phase out AND the limitation of itemized deductions. After reaching a certain income level both of these begin to phase out.

Kyle J. hits the nail on the head again. The discount is not deductible UNLESS you report $600 rent and then show $25 discounts on your return. The net effect ($575) is the same either way. The point is to report the the amount of income that you received - the $575.

Kyle J. is still correct. It would not be deductible.

Brian Hoyt, there's no one simple answer to that question. It would be treated in one of several ways depending on the tax status(es) of the LLCs and who or what entity is "borrowing" the money. For example, if the LLCs are treated as corporations it could be a loan between entities. If the LLCs are disregarded it could be a treated as a withdrawal by the owner/partner.

I agree with Steven Hamilton II, an LLC and Land Trust combo is a beautiful thing ;) I'm not sure that I would look at the "number" of properties in an LLC, but rather the "equity" in the LLC, as that's what really is at risk. For instance, you could have ten properties in an LLC with little to no equity and a single, free and clear property in another LLC. Take a guess as to which is more at risk :)

Justin, generally rental income is not considered income from a "trade or business." With few exceptions, only those who pay expenses incurred in a trade or business are required to issue Forms 1099.

Hope this helps :)

Gary, holding a power of attorney MAY be a determining factor in whether or not you need a license to manage your friends property (especially if you are not doing this for anyone other than this one individual and if you do not hold yourself out to be a property manager). You should check with a Californian real estate attorney.

Property management fees are considered earned income and are subject to self-employment tax. If you perform these services as an employee then the income is considered wages and is subject to the usual payroll taxes.

Please check with your personal attorney/tax pro before you attempt to get a EIN/TIN for your SDIRA. You did not make payments to the contractors, your SDIRA made the payments. Your custodian should issue the 1099s on behalf of the SDIRA, if they are required. It might appear to be "self-dealing" if you perform functions for your SDIRA that should be performed by the custodian.

Good deal. I guess I just hate the extra paperwork with the IRS and want to file as little as possible with them. That's why we would opt to have a single partnership EIN, use it for the LLC, roll all the current year transactions over to the LLC (since there would be no change in business entity) and file just a single 1065. But that's just me :)

That being said, there may be state filings that preclude this being acceptable for state purposes, which would make this a moot point.

Bottom line: Check with your tax pro who knows the ins and outs of your situation.

Steven Hamilton II, for some reason I was thinking that the same EIN could be used for the partnership AND the LLC taxed as a partnership as long as the LLC carried on the same business, took all the assets, etc...The LLC is just a disregarded entity for tax purposes and there has been no change in the business as far as the IRS is concerned. In this case, we would only file a single 1065.

Has that changed?