All Forum Posts by: Lance Lvovsky

There is a fine line with good tax planning and good tax presentation. Often times a tax position you make take on a tax return can seem aggressive if presentation is not correct. Taking aggressive tax positions as allowed under the tax law should be something you seek out and also make sure you have good tax presentation. 

Software alone will not cut it. You need a bookkeeper and ideally a bookkeeper with tax oversight or a bookkeeper that works at a tax cpa firm. For my clients with similar asset structures to you, we are very diligent in creating separate tracking classes for each property, reviewing lease agreements to record rent revenue and security deposits correctly, connecting bank feeds, etc. the higher quality your books are the higher quality your tax Returns will be. 

Costs will widely vary and also based on who is doing it. For example some studies include just the study itself whereas others will include a tax review and preparation in accordance with internal revenue manual audit procedures. 

There would be no US gift taxes owed. In addition, you may also be required to file Form 3520 report a receipt of a foreign asset. 

FIRPTA does apply, however withholding does not need to be done if there is no amount realized.

Couple things you need to know.

Transferring an asset into an irrevocable trust may have gift tax implications, and you may need to file a gift tax return.

Basis gets carried over when an asset is gifted into a trust. i.e. there is no change in basis

An irrevocable trust (non-grantor trust or complex trust) does not avoid paying capital gains tax. Whomever told you that is wrong. If you are working with a "promoter" of a tax strategy, run away.

When you sell real estate, there will still be capital gain. With that being said, there are strategies to defer and minimize capital gains. Common strategies include 1031 exchange and installment sales. A not so common strategy that I have used entails utilizing a few provisions of the tax law and effectively what happens is the capital gain gets spread over 25-30 years, yet the cash is received all at once. This is heavy planning using IRC 453.

Yes and if owned in an entity, you may have to file additional forms such as 5471, 8865, 8938, and fbar fincen 114 for foreign accounts collecting rents. Many of these forms carry penalties for non filing of $10k each. 

The IRS has agreements with many foreign jurisdictions regarding sharing data. In addition to Sch E, you may also need to utilize form 1116. 

Assuming there is no C or S corp election in effect for the LLC, then real estate held in the LLC can receive a step up in basis just as real estate held outright can. A multi - member LLC Taxed as a partnership can have a 754 election done (complex tax election beyond the scope of this reply).

If you are doing basic vanilla estate planning, assign the LLC membership interests to a revocable living trust. You get the probate protection, privacy, control, plus the tax benefits of step up I mention above.

If you received a capital interests in an LLC, you could have a taxable event upon receipt of the capital interests if there is value to the LLC. With a profits interest, there is no taxation because that is an interest in the future profits and appreciation of the LLC.

Anyways this is a complex tax area and one you should seek advice prior to entering into a transaction. 

There is a tax play that can be done to convert what would otherwise be ordinary income into capital gain income. The apartment building is generally held in an entity that is taxed as a partnership (such as an LLC). Prior to the owner getting ready to complete a condo conversion, the apartment building is sold to a corporation such that capital gain is recognized on the sale. The corporation would then naturally enter what is called dealer status and start selling off the units, by which time the spread between the sale price and new basis is minimal, and you would have converted what would have been ordinary income into preferential capital gains.

I can make some recommendations for you. Are you looking for someone in NJ or another state?