All Forum Posts by: Cameron Skinner

Has anyone ever done Cost Seg for a building placed in service years ago and applied for accounting change? If so did IRS approve? how long did it take? 

@Michael Plaks, Thanks for the correction on the 2 out of 5 year rule, I must have missed that the 5 out 8 change didn't make it in the final bill.  So much to digest can't remember it all!

I will disagree on the related party issue though.  While it is possible to structure this transfer to capture the increase in stepped up basis tax free, the way @Greg Prattproposed I believe would not.  In a former life I was involved representing a client where IRS was arguing that even if the transfer was legally correct the taxpayer had effective control so it was considered related party transaction, that case settled in appeals before going to tax court, but I remember the case law definitely leaned toward IRS.  

Greg, there are ways to structure properly just get a really good Licensed Tax Professional someone with some Letters behind their name not one of those franchises.

Hope this helps good luck   

Won't work if you have "control" of S-corp then its a related party transaction and you get carryover basis.  Control usually means 80% of voting rights by you or other related parties like Mom Dad brother sisters ect, but don't try and be cute and put in your girlfriends or best friends name and then transfer back, they look at who has "effective" control who put up the money who pays taxes and maintenance, ect.  

FYI new Tax code for 2018 changed to 5 of the past 8 years  You can always move back in for a few years when you get ready to sell, even if you don't stay the entire time the exemption is prorated.  So you will get at least part of the exemption.

Hope this Helps,

Good Luck

Best of Luck

@Oshi Jain  In regards to the owners of and S-Corp Salary, this is one of those grey areas of the tax code.  IRS basically says a "reasonable salary"  of course most want to pay as low a salary as possible to avoid additional payroll taxes while not running afoul of IRS.  If I were you I would figure out the responsibilities of the partners and the time they will devote to the business and then search for similar job offerings in your area and use that as a guideline, for example full time project superintendents in your area make between $35-$40 print out job listings and put in a file, and pay accordingly to the the time they plan to devote to the business.  You can adjust for experience, fringe benefits, ease of schedule ect. but document how you came up with salary An employment contract would also be helpful but not necessary.   As long as your reasonable IRS wont question it.  This provision is really for the Doctors and Lawyers out there who try to get away with paying an 18,000 year salary to themselves while their practice is pulling in 250K a year.  

Hope this Helps,

Good Luck

@Justin Windham thanks for the mention

@Brian Braunhuber to add to Justin's points you can also have a non recourse loan inside a Solo 401K which is unavailable to you in a SIDRA without out triggering URBIT Tax.  And you can also take up to a 50K personal loan from your Solo 401K if you get in a pinch.   

Look at a rolling to a Solo 401K is you can qualify, they are much superior for real estate investing and less expensive to maintain than a SIDRA  you might want to reach out to @Dmitriy Fomichenko he will talk you through your options at no charge

Hope this helps 

Good luck!

@Ben C.

Every State is different, but in general a Multi Member does offer a little bit, I mean tiny tiny bit more protection, but I think your over thinking it. Any LLC Corp Trust ect could be possibly busted with enough time and litigation. When you put your business in a separate entity, your just trying to make it difficult and expensive for someone to sue you. And make it so expensive and hard that its not even worth trying. In Florida, where I live, the only single member LLC ever broken was the Olmstead vs US. and that guy basically just set up an LLC to try and shield his personal property and pay his personal bills to hide from creditors. The court ruled his LLC was really not a business but an "Alter Ego" Even with this obvious fraud it still took the power of the FTC and Federal government to break the LLC. Unless you have multi-millions, it would not be worth an Attorney trying to spend hundreds of thousands in legal fees trying to crack your LLC, and even after they crack it they still have to win the case.

Set up your LLC

treat it as a separate business (no personal bills)

get a 500K liability policy

buy your flip and get going

when you get more than 500,000 in assets in one LLC open another when you get to 10 LLCs private message me and I will help you from there.

Hope this helps

Good Luck! 

@Ryan White

I see your in Florida,  I talk a about tax strategy on the podcast show 168, I'm not taking on any knew clients, but happy to give you a referral in Florida who can do Real estate tax planning strategy and cost segregation as part of their compliance work, Just private message me if your interested

Good Luck!      

@Ben C.

If you are going to just be a single member LLC, you could really just set it up yourself or have your accountant do it. Its really no big deal because you are 100% in control and its not like you will get in a dispute with yourself, so you will only need Articles of Organization. If you do go Multi member you defiantly need an attorney or at the very least a stock Operational Agreement from legal zoom or other type service. Now warning every state is different but LLC are limited liability "companies" not corporations and were designed by state legislatures for individuals to easily set up a company with liability protection with out the all the technical corporate governance required by corporations. In the 90s Mom and Pops were setting up S-Corps for tax and liability reasons and just ruining them same as they always had, without board of directors meetings minutes of meetings ect. so that's where the therm piercing the corporate vail came from. But LLCs are different than Corps and as long as its a bonafide business interest you will have a level of personal liability protection from business activities.

Hope this helps, Good Luck