All Forum Posts by: Mike Stone

we have a humble partnership LLC for an airbnb real estate rental unit.

1. do I include my state lic fees on the 8825 under misc or put them on page 1 of 1065?

2. do i put all my depreciation (including sec 179) on 8825 and  NOT on  1065 line 12 ?

3. am i correct that for this real estate rental 'business' there will be almost zero entries on form 1065... only sch K line 2 (the total income for both partners)  and then again in "analysis of net income" line 2b ii ( i am considering us both active limited partners since we 'manage' the airbnb rentals

THanks!

I have a very simple case where I have rental property that I have  owned for several years. each year I have submitted a very simple 4562 that shows an entry in PART III line 17 for MACRS deductions for prior assets and then this number is repeated again in PART IV summary line 22. This number is simply the original yearly depreciation that was calculated by my prior Accountant using the standard building value / 27.5 years, lets say $8000

THIS YEAR. I bought some furniture that i want to accelerate depreciation (section 179) , lets say $1000.

QUESTION 1

do i put $1000 on line 2 (Form 4562) and again in PART II line 14 (special depreciation) BUT NOT put it in PART III at all

but do put the $8000 in PART III under 19h (residential rental property).

WITH THE GOAL  that line 22 (PART IV summary) will show $8000+$1000=$9000 of total depreciation for this year.

QUESTION 2

do i need to add a supplemental statement to form 4562 that explains this $1000 item i deemed section 179 is furniture?

 Hi Basit - thank for your response but can you elaborate please?  I was informed that the "special case" avg stay of less than 7 days in the rental  'triggers' the ability for partners to use the early year losses as NOT PASSIVE and have this  flow thru to personal returns to reduce taxable income in these years . are you saying that is not the case?

@Alan Lacey   that was a great suggestion. the podcasts are very informative. thx

A CPA (in prior year) told me that if my rental property has avg rental period LESS than 7 days than my losses can be treated as "NON passive" on form 1065. in this case they go on page 1 of the 1065 and I do NOT complete a form 8825

the advantage being that on my personal 1040, these losses can REDUCE my taxable income.  is this true?   

 this year im using turbo tax for my 2020 1040 and its telling me i owe self employment tax  because of 'non farm gross income' on my k1 even though I have another year of  "net" loss.  where am i going wrong ?  

I also live in the peoples republic of California and I have been told that you dont owe the $800 extortion (min llc tax) if you dont 'do business' in CA.  if you have a property in texas and an llc in texas and a property mgmt company in texas and you take a trip or 2 per year there.. it seems you can make the argument that you arent DOING any business in CA.    thoughts?

hi - thanks for the quick response.   Im always  amazed at how complicated the IRS makes things and how poorly explained their forms are. 

I just spoke to my escrow company. Turns out the escrow company took responsibility NOT to relesae funds to  the foreign seller until after they received their withholding certificate from the IRS. 

That did occur because seller did not owe tax. thus Im told, that there no action necessary on my part. IRS notice was a bit misleading... it says 'this letter is your approved withholding certificate and your dispositoin is reduced to $0 in withholding'   but then later it says 'as the transferee you are responsible to file form 8288

however, after speaking to escrow company, it seems the sellers CPA has effectively done that for me

We just bought a US condo from a canadian person. (we are a multi member LLC). I believe we were told during closing that we would not have to worry about withholding taxes on his behalf.

now im getting an IRS request to complete 8288. is this just a routine procedure where I just complete it with '0'?

when reading the irs instructions. it seems to request us to complete 8288-A also . Is this form asking for information about the foreign sellers?

I bought my a vacation rental property via an LLC for the purpose of protecting my personal assets from liability. I just got an insurance policy on the place (i have $300K of liability) but I was concerned that the policy is in my own name and not the name of the LLC (my LLC is listed as an addon party).

the insurance people told me this is standard practice but It feels like Im a target. how have other people insured their properties in an LLC?