All Forum Posts by: Kin Lay

My mother purchased a property on 2011 for 480000 in California. The current price of the house is worth about $900000. The house is registered with my name and my younger brother’s name as joint tenant. If I want to transfer my title to my younger brother, what is the best way to do this? Any tax implications?

@Carl Fischer Thanks for the suggestion. I just called Fidelity and found out all the $41k is pre-tax contribution and employer match. I am filling out the form for the conversion and the form asks me how many % to withhold for the federal and state tax. I plan to put 9% for federal and 2.5% for state on this amount.  Does it sound about right?
I don't know when will I find a job this year as it seems a global recession is coming. Besides the stock that you mentioned, I am also eyeing Fannie Mae, AIG, Apple, and other California utility companies stock.

@Carl Fischer Hi Carl, thanks for the reply. I will look into convert it to Roth IRA this upcoming week.

If I were to convert it this upcoming week, do I get tax base on the year that I quit my job (2019 tax bracket) or the year that I made the conversion (2020 tax bracket) or other tax method?

I only work half a year last year before I quit my job and I didn't work any new job. So it will be a little lower than $40,000 of taxable income.

I recently just finished the coding bootcamp, so I am currently not employed yet, but is looking for a job. I don't know when I will land a job given the current economic condition as many companies frozen hiring. The average starting salary of software engineer is $80,000 and up in Bay Area and I felt confident that the stock I will invest in could at least double after a few years. Hope these information help!

Hi everyone, I quit my job last year around May 2019 to do a coding bootcamp to change career. I had around 40K in Fidelity 401K account and I rollover-ed to TDAmeritrade when I left the company. The current account type where the cash is at is "Rollover 401K". I thought about transferring the money to a self-direct IRA to buy rental property at auction. However, I don't think the amount I have can buy anything worthy, at least not enough for rehab and other expenses. With the recent fallen stock market due to corona-virus, I am thinking of using the money to invest in stock instead. Should I buy stock directly through my "Rollover 401K" account? Or should I open a new account type called "Roth IRA" with TDAmeritrade and transfer the "Rollover 401K" money and buy stock in that new account? Any other suggestion? I assume if I transfer from the "Rollover 401K" to a new "Roth IRA", I would have to pay tax on it right?

Hi everyone, I am new to real estate investing. I just graduated from college and landed a job not too long ago. I don't have money to buy a house right now and I think the real estate prices are too high and risky for me to jump in at the moment. However, I am interested in tax lien investment. I am wondering if I can turn tax lien investment into a business? Do I have to file any application or I can just buy a lien without file any business application? Should I create a LLC or wait a few years? I will only have $10,000 to invest next year, should I not create a LLC since profit from tax lien will be low? The reason I want tax lien investment because I want to buy a drone (I guess you can say this is for business to check out properties) and I want to use personal expenses (electricity, internet, and cell phone, airfare, and etc.) to offset the tax lien profit (I know it's not a lot right now, but I think I will keep doing tax lien investment for the next 34 years). I don't want to seek any CPA as of right now because I don't want to spend extra money, I want to learn about your experience. Any advice will help!

Thank you in advance!

@Larry Flanagan Can you show some examples of how you get to $30K passive loss? I am interested in exploring that area as well.

Hi,

I am trying to create a tax planning strategy for myself and I love to travel outside of the US once a year. 

I am not a tax accountant and I did some research on publication 527 about using rental real estate investment to offset regular W2 taxable income. From my understanding, in order to use passive loss to offset W2 taxable income, the individual has to spend at least 750 hours per year in real estate investing activity (I think this is the only rule). Let's say I want to make a real estate investment in southeast asia (outside of USA). I made a flight to several countries around southeast asia. I would spend 6 hours per weekday (75%) of the trip to meet real estate agent and check out houses there.

According to this tax planning strategy, I believe I will have rental loss (if I did bought the house and hire a property manager to manage that place) because I think the cost of airfare and hotel (land exploration expense), utilities (USA internet for research), and meals will be greater than the profit from the rental real estate investment that I bought. My question here is what types of meals are qualified for business expenses in the USA. Yes, USA because I spend time planning in the USA before going aboard.

Here are couple of situations (Note: during the following situations, I will create an excel file with 1-2 sentences for each event to keep record of what's being occurred or discussed on the dinner table):

1) I attend a restaurant by myself in the USA, but I spend at least 50% of the time reading real estate materials. Does this meal qualify for business expense?

2) I attend a family dinner within USA (group of 5 or more, but no more than a circular table) and during the dinner, we spend more than 50% of the time talking about risk, budget, and opportunity regarding to international real estate investment. Can I claim this entire meal for the entire group as business expense for myself?

Side Question) Is claiming around $2500 meal expenses while my potential international rental income of $1000 reasonable? (Math: SEA house $20000 at 5% return per year)

Thanks!

I want to change the strategy a little bit. I actually have an eBay store where I sell merchandises and I made a profit for the past 4 years. The profits for year 1 is around 3000, but declined to 400 this year as competition increases and eBay stricter and continuous changing rules on HTML and JavaScript rules for small store seller (eBay will delete your list if you don't correct what they ask). Sometimes I have no idea what eBay wants me to correct in my listing template because I am not technical savvy enough to know those coding language.

In this case, can I use coding bootcamp as marketing expense in order for me to meet eBay policy and create better and more attractive listing template to appeal the potential buyer?

@Dave Toelkes and @Bernard Reisz Thanks for the suggestion. 

Maybe I should change the presentation style of the coding bootcamp. Let me give you more detail about the bootcamp as education expense. It is for front-end web development, but not offered through university. I know I have mentioned that the coding bootcamp is used for finding an additional part time job to earn extra money and it helps with gaining knowledge on automation process at the current job (accounting and finance position). (Note: completion of coding bootcamp does not guarantee the person will get a coding job as competition has increased when more and more coding bootcamps are on the market)

Here is IRS education expense qualification:

You can deduct the costs of qualifying work-related education as business expenses. This is education that meets at least one of the following two tests.

• The education is required by your employer or the law to keep your present salary, status, or job. The required education must serve a bona fide business purpose of your employer.
• The education maintains or improves skills needed in your present work.

However, even if the education meets one or both of the above tests, it isn't qualifying work-related education if it:

• Is needed to meet the minimum educational requirements of your present trade or business, or
• Is part of a program of study that will qualify you for a new trade or business.

You can deduct the costs of qualifying work-related education as a business expense even if the education could lead to a degree.

Maybe instead of saying to find an additional part-time job, I change my argument to just this coding bootcamp will helps me gain technical knowledge on how to implement the robotic automation in the company by understanding how to talk to the technology team on technical issue and understand what they are doing. This would also improve my value in the company by having skillset that no one else on my department has. 

Should this be okay now if IRS challenge this coding bootcamp as education expense?

Hi everyone, I am interested in tax planning strategy to lower my W2 tax liability and create investment opportunity through the use of creative tax strategy. Can someone offer me some suggestions?

We can work with the facts about person A:

- W2 before tax income of 70K

- Less than 1 year full time work experience

- International travel at least once a year ($2500/yr - airfare, hotel, 50% meal & entertainment cost); assume person A will do land and cultural exploration, spend at least 4 hours a day during travel to speak with real estate agent, visit potential investment building and collect their business cards

- Utility expense of $115 ($45/mo cell phone, $40/mo internet, $30/mo electricity.

- Rent ($500/mo)

- single with no kid

- person A is interested in doing a coding bootcamp ($5500 cost) and find a part time web development job in the future; knowledge from coding bootcamp can also help person A to gain knowledge with automation in his current W2 job

- Does not own any business, but sometimes would talk about side business or investing opportunities over dinner table with friends and family (average cost for those dinners per month $300)

- Share a name with his mom on a residential property while paying $9000 property tax per year.

Here are some opportunities for person A:

- 18,000 contribution to 401K

- 5,500 Roth IRA or SD Roth IRA

- maximum 25,000 rental real estate loss

- purchase rental real estate with mortgage and take depreciation and property tax and other fees for rental real estate investment.

- tax lien investment

- open a LLC

- Real estate opportunity in Bangkok or Manila (USD$50,000 for apartment, 0.5% rent to price ratio); foreigner can only own condo, not land

- Real estate opportunity in Malaysia (USD$80,000, 0.5% rent to price ratio); foreigner can own land

- Real estate investing opportunity in Brazil, Greece, or etc.

- purchase land through tax sales, find construction company to build and rehab houses.

Here is an example of basic tax liability for person A if he does not participate in creative investment activities using 2016 tax rate:

Salary                                                         70,000

401K contribution                                     (18,000)

Roth IRA -

Property tax for Primary Property               (9,000)

Bootcamp as miscellaneous deduction      (5,500)

Taxable Income                                          37,500

Tax Liability (932.5+15% over 932.5)       6,417.63

How would you add or modify this sample strategy to help person A to lower his tax liability and turn it into investment fund? Please feel free to use fake numbers as sample for calculation.