Skip to content
×
PRO
Pro Members Get Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
$0
TODAY
$69.00/month when billed monthly.
$32.50/month when billed annually.
7 day free trial. Cancel anytime
Already a Pro Member? Sign in here
Pick markets, find deals, analyze and manage properties. Try BiggerPockets PRO.
x
All Forum Categories
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

All Forum Posts by: Christian Block

Christian Block has started 1 posts and replied 32 times.

Post: When can you take bonus depreciation?

Christian BlockPosted
  • Accountant
  • Redmond, WA
  • Posts 32
  • Votes 12

Sorry to derail this thread, but I think this is relevant info.

Maybe I'm hung up on "improper."  Is an improper method a method impermissible to the IRS?  Or is an improper method simply a permissible method to the IRS but one the taxpayer wants to change to achieve a greater tax benefit?

I think you can argue if the taxpayer filed a return with a permissible method (via with no cost segregation) point 2 does not apply and thus you go back to point 1.

BTW, I'm not arguing I am correct and will be happy to admit if I am wrong.

Post: When can you take bonus depreciation?

Christian BlockPosted
  • Accountant
  • Redmond, WA
  • Posts 32
  • Votes 12

This is the IRS guidance on amended return versus Change of Accounting Method.  In that revenue ruling bolded, the taxpayer used an improper accounting method not available for used assets and was required to file an amended return. I've not filed an amended return, in practice, to factor in a cost segregation.  We've defaulted to filing a change in accounting method in these circumstances.  Perhaps that is incorrect, I'm always happy to learn.

Adoption of a Method of Accounting

  1. A taxpayer filing its first return may adopt any permissible method of accounting. See 26 CFR 1.446-1(e)(1). Once the taxpayer adopts a proper method of accounting by filing its return using such method, it may not adopt a different method of accounting by the filing of an amended return.
  2. However, a taxpayer filing its first return using an improper method of accounting may change to a proper method by the filing of an amended return. The taxpayer MUST file the amended return prior to the filing of the next year's return. See Rev. Rul. 72-491, 1972-2 C.B. 104.
  3. Two returns filed for consecutive years using an improper method establishes a method of accounting from which consent to change is required. A taxpayer may not file amended returns to change such method. See Rev. Rul. 90-38.

https://www.irs.gov/irm/part4/irm_04-011-006

Post: When can you take bonus depreciation?

Christian BlockPosted
  • Accountant
  • Redmond, WA
  • Posts 32
  • Votes 12
Quote from @Michael Plaks:

@Karen Tan

It is not too late. You can do it now and apply to your 2022 tax return by filing an amended tax return for 2022. "Change of accounting method" will NOT be needed.

As was mentioned already, before doing it, you need to have an experienced tax accountant figure out if there is any potential benefit for you. Maybe, and maybe not, it's case by case.

Read this: https://www.biggerpockets.com/forums/51/topics/1075919-five-...


 In this case I agree with amending the return versus a change in accounting method.  Usually, this scenario happens when there have been multiple filings since the property has been placed in service, and would require multiple amended returns.  Since the OP obviously hasn't filed 2023, it would be easier to just amend 2022.

I still think the OP would likely be passive loss limited, however, making the cost segregation not worthwhile.

Post: Beneficial Ownership Information (BOI) Reporting

Christian BlockPosted
  • Accountant
  • Redmond, WA
  • Posts 32
  • Votes 12

Post: Beneficial Ownership Information (BOI) Reporting

Christian BlockPosted
  • Accountant
  • Redmond, WA
  • Posts 32
  • Votes 12

Post: Beneficial Ownership Information (BOI) Reporting

Christian BlockPosted
  • Accountant
  • Redmond, WA
  • Posts 32
  • Votes 12
Quote from @Caroline Gerardo:

two choices: 1.set up a FinCEN ID4 or 2. Foreign pooled investment vehicle then

  • a. EIN  b. SSN/ITIN  c. Foreign
  • You have to next step give your social security# or tax ID, address where you file, AND passport, driver's license...
  • so giving an EIN does not keep your name, address, date of birth, country of origin etc... out of the system.
  • A tax ID leads to the filer who is a human. 
  • All these companies that charge to hold your LLC secret: Legal Zoom/Northwest/ZenBusiness/INCFILE/Rocketlawyer have to find a new angle.
  • The tool will be available to lookup in 2024. Who is granted access? A court order, law enforcement of all types (yes you saw on TV how a dude gets his "police" friend to type in their search on anyone), tax people, mine government... 
  • then all the hackers who are already in these systems can ransomware or just post it on the internet.

My point of needing an EIN wasn't to keep a taxpayer's info "out of the system."  

But it looks like you are correct, the online BOI filing system does allow you to select EIN, SSN, or Foreign.

Post: When can you take bonus depreciation?

Christian BlockPosted
  • Accountant
  • Redmond, WA
  • Posts 32
  • Votes 12

First, will a cost segregation benefit you?  Unless you or your spouse qualify as a real estate professional it's not very likely, unless you have other passive income you are trying to offset.

Since you placed this in service in 2022, you would need to file a change in accounting method to factor in the cost seg for 2023.  This is complicated and pricey, so you want to make sure there is a benefit.  If the cost seg only creates a larger passive loss that you carry forward, I would argue it does not.  BTW, you would use your basis of $325k as the starting point of a cost seg, not the $410k.

Post: Beneficial Ownership Information (BOI) Reporting

Christian BlockPosted
  • Accountant
  • Redmond, WA
  • Posts 32
  • Votes 12
Quote from @Caroline Gerardo:

EIN will not help you.


Have you filed a BOIR without an ein?

Post: Need Tax professional - W2 employee with 1 LTR and 1 STR

Christian BlockPosted
  • Accountant
  • Redmond, WA
  • Posts 32
  • Votes 12
Quote from @Matt Smith:

Thanks Christian.  We are always doing work when down there, or updating, cleaning, adding value, decorations, furniture, etc.  

I'd say we spent ~40 days there last year, and worked at least 35 of the 40 days.  The first part was after closing, we went down there to get it prepped to list on AirBNB/VRBO so we were doing stuff each day.

As far as rental nights, we rented about 100 nights last year (no discounts anywhere) and weren't even listed on STR platforms until May. And it's a beach property so obviously it was heavy bookings over the summer, solid in the fall and very little in the winter.


It sounds like you are good on avoiding 280A with your personal usage. 

To get the benefit of taking your STR losses against your other ordinary income (and a cost seg would help to increase the loss), I think you want to make sure your average rental period equals 7 days or less, and that you meet material participation. I think you can meet this practically three ways,

1) you spend more than 500 qualified hours a year on the activity 

2) you spend more than 100 qualified hours a year and no one else spends more hours 

3) you are the only one who participates in the activity.

One wrinkle;  you and your fiancé might (likely?) want to split the activity since you each need to file a tax return.  I think this might create an issue with meeting the material participation. Did you have a plan for this?

Post: Need Tax professional - W2 employee with 1 LTR and 1 STR

Christian BlockPosted
  • Accountant
  • Redmond, WA
  • Posts 32
  • Votes 12

The first question I would ask you is how many personal days and how many rental days did you have on the STR? That will provide some clarity on your other questions.  

You are considered to use the STR as a residence if your personal use is the greater of 14 days or 10% of the total days your rent it a FMV. If it is considered a residence, you will be limited by Section 280A as to what you are allowed to deduct.

It will qualify as a personal day if you or anyone else with an interest in the property uses it, or you rent it to friends/family/etc. at below FMV. If stay there while you are doing work on the property, I don't think you count that as a personal day.

There is also a special rule if you rent it for less than 15 days; you don't report any income or report any expenses.