All Forum Posts by: Ron P.

 I'll betcha if it hadn't gone up in value the lawsuit would have evaporated years ago.

Don't know if it still is or not, but used to be that it took 70% to pass and the math questions were less than 70% of the test so if you missed every single math question you could still pass ... as long as you got the other questions correct.  Easy/hard? ... hard to say, depends on you.

It's not a tax, it's a withholding.  You get to apply it against your tax obligation at the end of the year.

Thanks all!

Seems like I need to rethink the amount of work I'm doing.

@Account Closed 

Thanks for your input.  Would you suggest one bank account and one credit card as well?

I have multiple flips going, all under one LLC taxed as an S-Corp, and have the accounting structured as follows:

- One Quickbooks file and one bank account for each property. I could use one file and one bank account for all properties using QB classes but I think it's too easy to misclassify transactions. And one QB file for LLC related expenses like meals and entertainment, licensing, workers comp, etc.

- I write checks for each property from its respective checking account for things like property taxes, HOA dues, utilities, etc.

- For rehab materials I use the debit card you get with each bank account for each respective property. I would however like to use one credit card for everything so I can get the points which can amount to a lot, but fear that would complicate accounting.

What do you think? How do you do it? Is there a more efficient way?

@Ewa Reza 

A SMLLC would be more for holding I would think, and a MMLLC or S-Corp for flipping, as you indicated. For flipping in California, a MMLLC still has to pay the state gross proceeds tax and LA City gross proceeds tax, and $800 minimum state income tax, but avoids the 3 1/3% state withholding on gross proceeds. A S-Corp has to pay LA City gross proceeds tax and $800 minimum state income tax, but avoids the 3 1/3% withholding and LLC gross proceeds tax. Again, all this on top of the state and federal income tax you pay on the net. Keep in mind that depending on one's tolerance for paying taxes these gross proceeds taxes don't amount to much compared to state and federal income taxes on the net.

I say this based on my own experience and what I've read, I'm neither a tax or legal pro.

Depending on your state and city you can be taxed on the gross proceeds, in addition to the income and SET tax on the net as described above ... even if you lose money on the flip. I know in Los Angeles for example if you are a single member LLC you have to pay not only a state tax on the gross (in addition to the yearly $800), but also a LA city tax on the gross. In addition to that the state requires a 3 1/3% withholding on the gross proceeds from a flip (a withholding, not a tax). So don't assume taxes are always on the net.

I'm dating myself but what the heck. I remember from years ago, that for a while Money Magazine did a yearly tax return test involving a hypothetical tax return and tax pros. Money Mag would ask a number of tax experts to calculate federal taxes for a make-believe family to see how they compared. Well, guess what, they didn't compare very well at all. Tax preparation fees range between $271 and $4,000 (1990 dollars). The correct answer came from the preparer who charged close to the low end of that range. I found this article describing the test: Tax Test

My question is, why should I pay a tax preparer $4,000 (in 1990 dollars) to prepare my tax return when I can use a random number generator to determine my tax liability and in all likely-hood have an answer no worse than a 'tax pro', and save myself $4k + probably an additional $4 to defend the non-sense in an audit?

@Mark W. 

I've only used Landlord Accounting.  Since you've seen both, is there any philosophical differences?  Like do they both have properties as customers and tenants as jobs for example?