All Forum Posts by: Michael Cooprider

Ok, I have 3 properties under my LLC (My wife and I are owners). I also have an umbrella policy to cover my personal assets. I have just recently filed and paid for an S Corporation to run my property management (Me and my wife). Note, for all of you CPAs and Accountants, this was advice from my CPA who is also an attorney in Alabama. Now, I am just about to pay off all of my houses and all of the rental income will be taxed with very little in the way of write-offs/expenses. I am about to retire and will have no more income under a W2. The structure will be LLC-owned property with an S Corp-owned rental property for a pass-through entity. Questions/points of interest I have:
1. I am assuming reasonable compensation/income is 10% of the rent and for this, I will pay income taxes 15.3%?

2. I should still get a 20% qualified business deduction on the amount I do not pay the management company, thus saving me on taxable income?

3. I can also put money from my profits into a tax differed account (i.g. a Roth IRA).

4. Will I be subject to excess net passive income tax (I am understanding that this is 25% of my corporate gross. I read that this could me as much as a 21% tax. 

5. Even though the properties are under the LLC and the management of them is under an S Corp, will my children be charged a capital gains tax if I pass away?

6. Are my long-term rental properties considered passive income and what does this mean to me legally for tax purposes? 

I paid $1,800 last year to a CPA who worked for only 20 min to file with just my LLC so I switched to a new CPA/Attorney who is setting all this up. He is telling me it will cost me about $2,000 after the initial cost to do my annual taxes but save me $3000 in paid taxes. That is why I did this in the first place.

I have already paid out $1,000 in legal fees to set up the S corp, $200 to set up new bank accounts, and will have to pay about $100 a month to use software to run the management company. Not to mention, my time and added headache of the whole thing. Is the juice worth the squeeze in this case? I am a go-getter and do not mind the extra work if I will profit from it. 

I know you do not like to give advice so call it counsel or wisdom from others who have done this.....

Help..