All Forum Posts by: Nicholas Aiola

@Jackie Mann Thanks!

1. Distributions. This is not a taxable event; you are taxed on the profit the LLC makes.

2. No, however, if you have net capital (Bitcoin) losses, you can offset a max loss of $3k against any type of income.

3. You'll want to keep all receipts for your records, but a CPA does not need to see every receipt to prepare your tax returns. You should use an accounting software to create financials (balance sheet and P&L) to give to your CPA.

4. Yep! That's the P&L I mentioned in #3. If you hrie your CPA for bookkeeping, they will prepare this; otherwise, you will need to provide it.

5. We do have a rental bookkeeping spreadsheet template that we provide to our clients, but there are several online - Google "P&L template".

6. This can be tricky with real estate since several pre-acquisition costs are added into the basis of your first acquisition instead of booked as start up costs, but track all business expenses and your CPA will help classify them.

@Jim Hlavacek I agree with what @Bonnie Griffin Kaake, and would also add that it depends on the classification of the rental property in question (passive or nonpassive). We want to make sure that if you pursue a cost seg study, that the benefit outweighs the cost.

Bonnie, to answer your question, we sure do work with syndications!

@Chris Conrad That's because there is no straight answer. It is case by case - the two main determining factors the IRS looks at are intent and portfolio history. The 1-year holding period alone does not determine the classification. In the event of an audit, you would need to prove your intent was to hold it as a rental property. It would depend almost solely on that, since you do not own other rentals (which would help make your case that this one was intended to be a rental).

@Todd Pavlik Correct, loan proceeds are not taxed. From a tax standpoint, the only meaningful implication is the deductibility of your interest payments.

@Chris R. Gallo 1031 exchanges and opportunity zones are two examples of how to defer tax on an exit in a scenario like yours.

@Sandip Hirpara While it is tough to materially participate in an STR 5 hours away, it is not impossible. That said, to answer your questions:

1. Without the grouping election mentioned in #2, you must materially participate in each STR separately.

2. You can group both STRs as one activity for purposes of material participation under Reg. Sec. 1.469-4.

@Lyndsay Zwirlein Congrats! I can't speak for other CPA firms, but we do offer advisory services as a standalone service if you have a different solution for tax prep - we have several advisory-only clients!

@Aaron Bentley You would need to speak to your tax professional for specific tax advice - without all the facts and circumstances, I would not be able to provide general tax advice (there's no such thing as "general" tax advice anyway 🙂).

@Scott Trench You are correct about the value of Bitcoin being taxable as ordinary income upon receipt for services. At that point, the amount you received becomes your basis. If it is subsequently sold, the gain or loss (sale price minus basis) is capital in nature. 

If sold at a loss, the loss is reportable in the year of sale and would be able to reduce other capital gains in full, but if the loss exceeds any capital gains, it can only reduce other types of income by up to $3,000. This is the same $3,000 limit that applies to losses from selling stocks and bonds.

You cannot use capital losses from Year 2 to offset income from Year 1. 

@Robyn Green We sure do!