All Forum Posts by: Jeff Nash

@Tim Jernberg you have to have income that is subject to self-employment in order to contribute to a retirement plan like a SEP IRA or solo 401K (self-directed is the most expansive option). As @Ashish Acharya noted, there are ways to convert or transform your income to some extent in order to utilize this strategy from a tax standpoint, but the scale of your operations and cost need to be evaluated.   

@Champ Leong no, you cannot.  The reason for the question is that if you are saying you have a capital gain on a personal residence it might not in fact be taxable at all depending on your holding period and usage (121 exclusion - 2 out of last 5 years rule).  If it is an investment property that you sold or are selling, a 1031 exchange might come into play depending on meeting certain eligibility criteria and your goals.  

@Michael Plaks and @Chris Seveney I completely agree that oftentimes the legal necessities are not followed which renders LLCs or other legal structures ineffective or useless.  Not keeping any annual minutes or having an operating agreement as examples. This is the result of wanting to skimp on costs and opt for DIY solutions or not being aware of what is really required in the first place and having a maintenance program.  

@Michael Plaks did a terrific job of explaining the technical angles of a seemingly simple question.  To summarize from his comment, there is often significant judgment required on many issues and it will involve different professionals such as attorneys and accountants, and perhaps many others, so you'll often need to work as a team.  In other words, certain topics are gray and you have to decide what course of action you are most comfortable with after understanding the pros and cons.  In this particular case, Michael really laid it out for you and gave you a grand slam answer!  You can also see why we as tax professionals are really compelled to use general language like "it depends" etc to fact patterns and questions, especially on these public forums where often times there are assumptions that have to be made and maybe only partial information is provided.

I would want to verify the calculation of the capital gains, and I assume this is based on the sale of an investment property and not a personal residence? Also, I am not sure of your tax situation and whether you are a REP or have positive NOI or net rental income from other properties, but the way to benefit is to simply make expenditures on the properties or otherwise that are tax deductible and that you need - like repairs or personal property like small appliances that can be immediately deducted. Even though it is a small gain you could just do a 1031 exchange if you plan to reinvest the proceeds of the sale and it has not already occurred or been completed. Me or any other tax professional would need to verify and understand your situation before affirming what is the best course of action.

You just come up with a reasonable allocation method for "shared expenses" that benefit your operations as a whole and be consistent and stick to it assuming circumstances don't change.  

Me and @Denver McClure might be able to help in some different ways if we better understand the situation.  It seems asset protection and income tax concerns are the crux of the post and some clarification is needed.  

I’ll message you. 

Yoon, you can’t use a 1031 if the replacement properly is a primary.  What is your concern about having a mortgage?  With that potential gain on the rental I would evaluate your options closely. I will message you.  

I just replied to a similar post and can speak to the interest income as @Chris Seveney noted the popular business credit cards.  We use and recommend these options for our advisory clients depending on the circumstances.

- Flourish Cash

- MaxMyInterest

- Interactive Brokers