All Forum Posts by: Mike Richards

If you are on cash accounting, yes you could do that.

On the other hand, you are ignoring carry-forward losses.  Realistically, there should be no benefit, and there are probably some disadvantages, of doing what you propose. (Late fees would be one example.)

OK... 
I'm sorry if this is obvious to others here, but I'm literally trying to explain this to my tax preparer and she's trying to tell me, "Well, you did use any portion for rental use..."  And we're getting into a somewhat heated discussion over what really comes down to the legal meaning of PORTION, which she's apparently unaware of.  So if I'm off-base, I certainly apologize to you all and will have to apologize to her... otherwise, I'm going to have to make 100% certain that this interpretation is correct before I speak with her again.  And if necessary and she can't see it my way, I'll have to find a different tax preparer, I guess. . . .

@Jason V.

Crucial details are missing. My answer assumes that it used to be your residence for at least 2 years after which you rented it for 2 years and never moved back in before selling it. And you took depreciation. And your capital gain on the property, including depreciation recapture, is under the limit of $250k for singles or $500k for married couples. And you have not sold another residence within 2 years of selling this one.

With these assumptions, it's full exclusion and you do not need Form 8949. You do need Form 4797 to calculate and report depreciation recapture and pay tax on this portion. 

If what I wrote is not clear to you or if some of my assumptions are wrong, then stop your DIY attempt and hire a tax professional.

I am not sure why several people here wrote that you should've had your assets in LLCs. I am an attorney and have sued people successfully and went after their LLCs assets because they had plenty of equity (and of course that was beyond their insurance)

Hindsight is 20/20 but I want to be clear that instead of placing each one of the properties in a separate LLC (which would've cost you a lot of money and hassles) I should've stripped the equity by placing a special kind of lien against the equity of each property. There is a way to do that with legal reason and the liens are to your own LLC (just one LLC entity in WY that can strip the equity of all your portfolio making it impossible for anyone to collect anything beyond your $15k low coverage which should've been a lot more than that and you know it!)

By the way the structure I am writing about here keeps you in full control and you do not need to transfer assets, since we just record the liens against them.

I am not soliciting your business because if we do this for you now, there is a 50/50 chance the plaintiff's attorney will complain to the court that the liens were placed after the lawsuit had been initiated.

All you can do now (and this is not a specific advise since I do not have all the facts and am not handling your case) is try to reason with them by playing the poor old boy card!