All Forum Posts by: Bill Walston

This is great advice! There are only a few states that have land trust statutes on the books, several states that don't have statutes but DO recognize land trusts from other states, and then some (like my state of TN) that do not recognize land trusts at all. You should check with a good local real estate attorney to see how land trusts are treated in the state in which your property is located.

@Simon W. , I have no doubt that "they" said what you said. But your friends' answers may well have depended on how you phrased the question. Were they asked "where do you deduct coffee and donuts?" Or were they asked the more appropriate "Where do you deduct food items provided to sub-contractors on the job site?"

And I would debit a "Subcontractor Expenses: Other" account and credit cash or the appropriate payable. IF these items were provided to my OFFICE staff then I would be more inclined to agree with you. But they are not. They are provided on a specific job site to subcontractors rehabbing a specific property (an inventory property). And the fact that YOU have never seen it done this way doesn't mean that it's not done. In over two decades of dealing with my own real estate investing and that of my clients I have seen these expenses handled exactly the way that @Steven Hamilton II and I have described to you. At the end of the day it's an immaterial item, so you classify it as you wish. We'll do the same.

Sorry, @Simon W. , but it doesn't "depend on how you do it." The OP asked specifically about deductions when providing items for work crews on the job site. The work crews are constructing inventory. Accordingly, COGS most definitely is involved. @Steven Hamilton II was spot on with his assessment.

Not quite right @Taylor Green :) Corporate earnings are NOT subject to "self-employment tax" - corporations are not self-employed. The wages that you take from the corporation would, however, be subject to the usual payroll taxes and withholdings.

Greg P., it's not possible to answer that question based on the information that you give. You're likely not "paying" that amount in payroll taxes, since payroll taxes are both paid by the employer and withheld from the employee's pay. You then remit them to the taxing authority.

As suggested, your best bet is to talk to your accountant or bookkeeper.

Spoken like a true salesman :) It is no easier to "pierce the veil" in FL than in any other state IF the LLC is set up and managed properly. The courts in FL do tend to allow piercing more frequently for single-member LLC's (they treat them as any other sole-proprietorship) so you may want to avoid that structure. Regardless, if you're going to be doing business in FL you will have to be registered in that state (either as a foreign or domestic entity).

Jimmy Hong, if you delay your move to Austin and purchase a new primary residence in the same area in which you are now living, you'll most likely lose your proration of the capital gains exclusion. This is why it's important that your tax pro have ALL the facts in order to advise you properly.

The most straight forward way to transfer the property is with a Quit Claim deed. I would advise checking with your tax pro, as there are gift tax implications on the transfer. That being said, the lifetime exclusion would most likely eliminate any taxes.

I find it difficult to believe that there are very many "new" strategies for investing in real estate. The strategy may be new to you only because you've not heard of it until now. Or it may seem new because someone has taken a strategy that's been around since Noah and given it a new name (like AMPS/MAPS).

The fact that a "strategy" is still around may just mean that it works - the strategy, that is, not the course. :)

Eric Lee, I think the answer to that question would depend on how you plan to minimize the loss. You mention depreciation on properties. If your plan is to minimize the loss by NOT taking depreciation on the properties, that won't work. The IRS reg refers to "depreciation allowed or allowable." This means that the Service will determine the tax consequences of the transaction as though you had taken the depreciation expense, even if you do not.

If you mean to minimize the passive losses by decreasing actual operating expenses, then I would be all for that :)

I still find it amusing to hear folks talk about investing in real estate for the tax losses. That should be a side benefit, not the sole reason for the investment. Just sayin'