All Forum Posts by: Rud Sev

Thank you all for your information and feedback. I learned a great deal, appreciated!

 Thank you Evan! This is exactly the answer I was looking for!

Thank you Sean, sorry I've bad at explaining the general use case I'm interested in. The case I was interested in was distribution, leading to income reported in K1 (e.g. depreciation doesn't match the income made that year). I should have used income instead of cash flow. 

Sorry @Sean O'Keefe, I shouldn't have used the word "gain". I meant yearly K-1 reports showing yearly income from cash flow (prior to year of sale), would those be taxed as ordinary income please?

A quick follow up that I have (I understand things can really quickly become complicated): if there is cash flow, and that cash flow is larger than any depreciation (assume no cost segregation), K-1 reports a gain, is this gain considered to be ordinary income please?

Thank you @Michael Plaksgreat article. Particularly enjoyed the second one - it may have left me with more questions than answers, but I think I get more of the gist of it. Thanks!

Hello,

I am new to the world of syndication (LP investor) and want to understand how taxes at a high level for syndication as LP before asking individual specific questions to my CPA.

Notably, I want to understand how preferred returns/cash flows are taxed, if at all, until the amount invested has been returned. I could not find the answer I'm looking for when searching.

The following example could be used:

- Amount invested $100k

- Preferred return (5 years): 8% or $8k

- Disposition (Sale) (Year 5): $200k

This simple example assumes no cash flow beyond the preferred return, no cost segregation/bonus segregation, and doesn't take depreciation into account.

Would the first 5 years of cash flow (preferred return) not be taxed, and only the remaining amount on the disposition would be taxed (e.g. $200k - $100k + 5 * $8k = $140k)?  Would the federal tax liability be $140k at year 5 for the sale, with long term capital gains (ignoring any Net Investment Income Tax)?

If there is a good post or article regarding this topic, I'd be happy to read it. Thank you!

Thank you both very much!

I’ve asked my CPA to walk me through any NOL carryforward and just in general how the carryforward losses were calculated as well. Thank you.

Hi Michael,

Thank you, I will message my CPA asking for a more detailed explanation.

I've been inquisitive with my CPA, but unless I ask question I do not get explanation (and unfortunately not a walk-through), although I've shown interest understanding this further and further.

I'll try to reformulate my question more clearer (and with more data) - the problem that I have and will have is figuring out if my questions and confusion are due to a lack of understanding on my part, or my CPA is truly making mistakes.

Regarding carry back, thank you for this info. I ran into this recent TurboTax article  that led me to believe it was possible: Second, you may have a net operating loss (NOL) if the Section 1231 loss is large enough to reduce your other income below zero. If so, you can carry back the NOL for at least two years and use it to offset taxable income in those years.

Hello,

I sold 2 properties at a loss in 2023, and one property for a small gain in 2023. When looking at my tax return from my CPA, the losses and gains show up on Form 4797 (Part I for the losses and the gain in Part III).

I noticed that the loss from Part I was shown on schedule 1 line 4. and helped zero my taxable income in Form 1040 line 15 (I had a negative total income on line 9 and 11). This is great, although it looks like I couldn't use the standard deduction due to the loss. I am having a doubt here, as this seems like active losses from the sale, whereas the property was a commercial rental property held > 1 year. This is my first flag.

My total income is negative, so my loss is greater than this year's income. However, my CPA has a carryover capital loss worksheet for next year which pulls in losses from Schedule D / Form 8949 (sell of stocks), but not the long term capital loss from selling rental income property (on form 4797). This is m second flag. I am also reading the section 1231 regarding net operating loss (NOL) and wonder if the leftover could be carried back on the last 2 years of tax return?

I am unsure if my CPA has: 1) mischaracterized the losses from the sale of my rental income properties, and 2) is missing out (either carry back for 2 years, or future carryover) the loss from the sale. If there is any doubt, I would seek a second opinion but I am unsure if my CPA is wrong in this case, or if I should question further. This may be trivial and I may be missing something simple.

Thank you for your help and guidance.