All Forum Posts by: Eamonn McElroy

@Raushanah Morgan

Greetings from someone who also moved from Memphis!

Atlanta traffic is worse than Memphis; but there's so much more to do that makes up for it.  I'd focus on these things, and not necessarily counties:

-Proximity to where you'll be working -- at least for a primary residence. (I personally don't want to be stuck in a car for 2 hours a day)  If you're self-employed or can work from home, all the better.

-Where the numbers make sense.  Especially considering a possible exit strategy may be to convert into a rental later.

-Close to a MARTA station if possible.

-Some 'value' or 'catalyst'.  Up-and-coming, hidden gem, etc.

Food for thought.

Don't forget to capitalize all improvements to basis to reduce cap gain, especially if Sec. 121 is off the table.

"You mentioned tracking the tax basis & capital for both LLC's...did you mean the originating LLC that owns the property that my LLC bought a share of? I'll start looking into my own LLC info needed, but it seems like it is simple, right?

• $100k goes in to my LLC (sourced from 3 co-owners)
• $100k goes into RE LLC to become Limited Partners, owning ~1.5% of RE LLC property
• my LLC gets quarterly distributions, based on profits from RE LLC
• at some point in future (3 years?), the RE LLC plans to re-finance and cash out all its Limited Partners' principle."

Ha, simple yeah. :)

Except you left out taxable income/(loss), tax-exempt income, and non-deductible expenses.  All of which affect tax basis.

@Adam L.

It's important to track the tax basis of not only the investment (Atlanta GA apartment LLC), but also the tax basis for you and your partners in the holding LLC. Capital accounts under Sec 704(b) should also be maintained for a partnership.

Your CPA/EA should be taking care of all of this for you.

Easiest to just code cash in as "owner's contribution" and cash out as "owner's distribution" on the balance sheet.  No need for a loan.  No tax effect.

Shouldn't create legal issues but I'm not an attorney.  Cash out refis are common.

What is the LLC's tax status? Disregarded entity, partnership, C Corp, S Corp?

As @Lance Lvovsky mentioned, it rarely makes sense to buy the company instead of the company's assets.  Tangible property, real property, and intangible property can all be acquired via an asset purchase.

It would seem buying the company would be advantageous if the current adjusted tax basis of the buildings is materially higher than fair market value...not likely, although possible.  But then you have to contend with rental real estate inside of a corporation.

This is just as much a legal question as a tax one.  Undeclared liabilities and/or lawsuits?  You inherit those too when you buy a company.  Rope in your attorney too.

A new LLC taxed as a disregarded entity (single-member) or a partnership (multi-member) to buy the assets from the older gentleman's company might seem advantageous. No way to be sure without knowing your facts & circumstances, and goals.

Should make for a good conversation with your CPA/EA.

@Michael Plaks

"6. Finally, if you're indeed living in Malta, there're additional complications of being a foreign investor. This really needs to be handled by an expert. Have a look here."

Highly agree with Michael.  A non-resident alien investing in the US adds wrinkles to tax compliance not encountered with your plain "vanilla" US citizen or resident alien tax return.  The penalties associated even with non-willful failure to file some of these forms is steep.  Not to preach, but if a non-resident alien is going to invest in the US, they should build the cost of a solid tax CPA or tax attorney with inbound international tax experience into their operating costs.  Yes, it won't be cheap, but not doing so could cost them even more money in penalties and interest.

@Paolo F.

"it is not just for saving money. I keep on hearing different things from various CPAs (friends' ones, some I contacted, and others); also at the IRS people do not always seem to know what they are talking about."

Reps at the IRS are not authorized to give tax advice, and it can't be relied upon, even when they're trying to be helpful.  Most of the people that you will get on the phone will not know tax law and filing obligations.  The ones that know about this will be higher paid and not answering phone calls from the general public.  You keep hearing different things from CPAs because international tax as it relates to the US is complex.  Not all CPAs have developed a niche in it or even deal with it.

It's best to engage a CPA.  Someone who examine your facts and circumstances and advise you on tax entity structuring and treatment of payments/expenses.

If the washing business is a disregarded entity, there would be no deduction as you're just moving money "from one pocket to the other".

If an S Corp or C Corp, possibly, but then we'd have to look at: is the payment reasonable, ordinary and necessary.  There may also be tax ramifications to you on your 1040 under this scenario for the payment.

Your fishing activity is most likely classified as a hobby.  The TCJA made unfavorable changes for hobby related expenses.

A lot of moving parts here that you're asking about.

Define "pay me for advertising"?