All Forum Posts by: Michael Plaks

@Max Gradowitz nailed it on taxes. With or without an LLC, your tax return will look exactly the same, and your taxes will be the same. You will need to make an extra step (corporate election) to change taxation for your LLC, and you need a good reason to do so. Usually, no good reason.

Then the question of creating an LLC is strictly legal protection - which I will leave for attorneys to muddle. :)

@Alex M.. Too heavy for my taste. This is not to argue with lawyers, as I'm sure there are legitimate benefits they would point out. It's a question of whether your legal risks justify the cost and the hassle of this setup. And maybe they do, not my call.

There are several older threads on this forum discussing Anderson Advisors.

@Amelia Navarro, what is going to happen to your CA home?

@Jason Langmo

Just to simplify how the inheritance tax works: they would owe 40% on whatever is above $5 mil, not on the whole amount. I.e. if the estate is valued at $6 mil, they will pay 40% of $1 mil, not 40% of the $6 mil. (I crudely rounded my numbers for this illustration)

The details are very well explained by @Katie L.

@Boniface Ntawutarama

For legal protection, attorneys (which I'm not) normally recommend an LLC in the state where you operate.

For taxes - nothing is needed until your business becomes profitable and you determine your business focus. And your LLC can be adapted to any tax purposes you would need down the road.

Where to find an attorney? Here on BP. Post a new message "Looking for an attorney to form an LLC in Utah."

Like I said, try to get it upfront next time. Getting them after the fact, as you experienced, is a long shot.

What @Brian Schmelzlen described is correct, and it applies to "trades and businesses." Managing one rental house usually does not qualify as "trade or business" - this is why you're not required to send 1099s. 

It's still a good business practice to do so in the future.

Receipts and invoices are good to prove your deduction in case you're audited. They are useless for 1099s.

If you only have one rental house and no other RE business - then you don't have to. But it's a good idea to do it anyway. Going forward, I recommend you collect SSNs before the contractor starts, as it is next to impossible to do it after the fact.

As far as we tax professionals understand it TODAY - yes. The law is actually unclear on this, and many other, provisions. It will be clarified and better understood in the coming months. Nobody can give you a definitive answer yet, but as of now - the answer is "probably yes."

Cannot make a decision for you, sorry. I would need more data, and even then it's debatable.  Generally, if you invest $500 and receive $8,000 - it sounds like an OK investment.