All Forum Posts by: Daniel Dietz

Originally posted by @Ashish Acharya:

 In a very simple word, if you didn't bring money into the deal, and you are entitled to receive money when the company liquidates (hypothetically) its capital with no basis of yours, then you will have to pay taxes on the money you got for free. An attorney can draft an agreement to avoid capital interest. 

- If you dont want a taxable capital interest, your interest should only share future earnings and appreciation attributable to the profit interest. The capital interest participates immediately in some portion of the LLC's existing value. (If the value is 0, then it doesn't matter. But if assets are contributed, and you are entitled to the portion of the value, then it will create some taxable event).

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If a partner who brings no 'cash' to a deal, but does the legwork and also signs on the loan needed, I assume that they *then* have an 'equity interest' since they are responsible for the loan to be repaid?

Thanks, Dan Dietz


 

Originally posted by @Ashish Acharya:

 In a very simple word, if you didn't bring money into the deal, and you are entitled to receive money when the company liquidates (hypothetically) its capital with no basis of yours, then you will have to pay taxes on the money you got for free. An attorney can draft an agreement to avoid capital interest. 

- If you dont want a taxable capital interest, your interest should only share future earnings and appreciation attributable to the profit interest. The capital interest participates immediately in some portion of the LLC's existing value. (If the value is 0, then it doesn't matter. But if assets are contributed, and you are entitled to the portion of the value, then it will create some taxable event).

......................................

If a partner who brings no 'cash' to a deal, but does the legwork and also signs on the loan needed, I assume that they *then* have an 'equity interest' since they are responsible for the loan to be repaid?

Thanks, Dan Dietz


 

Zev in a previous answer hit the nail on the head. There are at least a half-dozen great quality providers we're very active here and specializes in accounts for sdira and solo 401k. The particular on I also does a lot of lending out of his personal sdira account I

I use both sdira as well as a solo 401k, as do three of my partners. In our case it was where most of our assets were tied up oh, so it made sense to figure out how to real estate. There is lots of good information here on BiggerPockets if you dig around and several good podcasts that cover it also.

I personally learned a lot from a couple of the podcasts that cover the topic a lot, along with Mark Kohler on YouTube who is a lawyer, accountant, in plan provider who invests with his own retirement accounts also

I find that Mark Kohler, from kkos legal and accounting company has some great info to teach yourself the basic concepts. If you Google him he has a ton of content on YouTube. We have used their services in particular for the part of our investing that we do with our retirement, which is one of their specialties

@Brian Eastman how we look at it outside of retirement plans is that "Partner #1", in this case, the "Private Money Partner", brings just the Down Payment - which the deal could *not* happen without that. That half of the partnership does not need to do *any* of the finding, acquiring, or arranging to make the deal happen, *just* down payment funds. So this partner is *just* as critical to the deal as "Partner #2" if they do not have those funds available it seems.

"Partner #2", in this case, the "Manager/Business Partner" does the finding, analyzing, acquiring, arranging rehab if needed, and finding tenants and ongoing record keeping needed. They could also do ongoing PM if this is *not* the retirement account side of things.  They sign the Personal Guarantee on the loan needed since "Partner #1" can *not* do this if they are using their retirement funds since it would be a Prohibited Transaction it seems. So this partner is *also* just as critical as the first to make things happen. 

Let's assume Partner #1 is someone else's SDIRA or SOLO401K that wants a passive investment, and I am Partner #2 who knows how to get this all done but do not have that down payment available right now. Are both Partners not equally critical to make things happen, but just in different ways?

Thanks for your time, Dan Dietz

@Brian Eastman or other experts in this field,

In regards to the 'percent of ownership' that an SDIRA (or SOLO401K) owns in a partnership or LLC - it seems like I have read conflicting things on the rules for that.

What I am wondering is if *my* SOLO401K partnered with a non-disqualified person 50-50 ownership on a rental (most likely with an LLC) and my SOLO401K brought the 25% down payment needed and the other partner secured and signed the personal guarantee for the loan of 75%, can we still split profits 50-50 per a partnership agreement?

We do this type of arrangement right now but *not* including any retirement accounts on either side. The 'partner' to us brings the down payment, and we find and get a loan for the LLC we have formed. Then we split everything 50-50.

Thanks, Dan Dietz

Another great one to check out with the mark Kohler KKOS lawyers and CPAs. They have offices and I believe in Arizona, Idaho, and Utah but they work all over the country.

you can get a good feel for some of how he and his Partners think if you just Googled him on YouTube. Tons and tons of great content. His partner Matt Sorensen. It's also written the best selling book on investing with retirement accounts if that is your thing. That is how we originally found them. Would highly recommend.

Hello all, 

We are in the process of getting our principal residence ready to sell. The problem is we do not want to move out for roughly 5-6 months. 

Our main reason is that we are just starting to build out our new place, and that is how long it will take to be ready. 

In our area, town of about 10K, things are selling like hot cakes and for good money. Neighbor just sold their place that they purchased less than 2 years ago for 180K for 280 in a couple of weeks. 

We would like to 'lock in' a good selling price for us, and feel it could also 'lock in' a good price for the potential buyer instead of taking the chance that things will go up even more if they were to wait until late spring or summer. 

Have others been in this situation, and if so, how did you deal with it? What did you see at pros/cons for each party? How did you handle ernest money etc....?

Thanks, Dan Dietz

Thanks for the reminder to take a look at that!

I assume it is Bonus Depreciation that allows the writing off a 'non-appreciating asset' like a truck for a contractor all in one year right now? If so, say I buy a used 30K truck, depreciate it all (we are having a very good year financially this year) and then drive it for 5 years and sell for 10K. 

The only part that needs to be Recaptured is the 10K 'residual value', because the other 20K DID actually depreciate (unlike most real estate) correct?

Thanks, Dan Dietz

@Robin Cornacchio, I hear what you are saying about 'getting the write offs', but there are a few different ways of looking at that. 

Lets say you have a paid-off property worth 200K and not other funds in that account(s). It brings in 20K per year, and you have 5K of expenses - taxes, maintenance etc..., so you 'net' 15K. So even though you 'took in' 20K, you also paid those expenses OUT of that same account, leaving you with 15K. If you take that 15K out as a distribution, you are in essence NOT 'paying tax' on that 5K of expenses. Still 'writing it off, just different terms and timing :-)

Looking into the effects on inheritance is definitely a good idea. One place I would recommend is Mark J Kohler's youtube channel or website. He is both a lawyer and CPA, and has TONS of good content and books focusing on small businesses with a heavy emphasis on real estate also. 

Dan Dietz