All Forum Posts by: Steven Hamilton II

I agree with George, you are breaking even. Depreciation is just a tax offset for when you sell the property. maybe you should pay a bit more into the principal on the property and refi a lower amount.

Oh and to add to that, the losses will offset positive income years or you will recognize all of those losses in the year in which you sell the property.

Steve covered that very well. It depends upon the type of expense and when it happened. Also, you want to consider that you will not be filing a Sch C with your 1040 NR you will be filing a Schedule E.

If you two will be keeping the property long term than you may want to consult your attorneys and ask them if it should be formed into a partnership by forming a partnership agreement upon which each of you own 50% detailing the payment structure and who handles situations where the expenses exceed income. While he receives guaranteed payments until his investment amount is fulfilled. In his will he will need to indicate that his share is to be passed to her.

If you have more questions about this don't be afraid to ask me about the accounting and tax implications.

Dave, feel free to send me PM or an e-mail and we can discuss your audit.

Most common is the use of the LLC taxed as an S-Corp. Purchase the property in the corporation's name, you will have to give a personal guarantee and do the work, sell the property, pay yourself a reasonable salary for the amount of time you put in. I highly recommend you give yourself and hourly wage above or below minimum wage is your choice. And often times most of my clients wait until the last quarter to pay the salary to themselves so they know how much income has been brought in.

Your concern about asset protection. Keep separate bank accounts, keep all transactions separate. Do not pay for a trip to taco bell with your company checking account... etc. Treat it as the separate entity that it is.

Roy, I PMed you my contact information.
Also, I have 3 clients at the moment who's 2010 returns are being looked at by an auditor.

Cheryl,
All records every year should be put together in a fashion that if the IRS were to audit you, all you would have to do is pull out those items from your files. How else do you get the final numbers for your tax return? Also, just because you qualify as an RE Professional one year, does not mean you will the next.

When you work with a handyman, just put down, "Worked with handyman on x problem for x property.

And yes those are some of the reasons audits are picked, the computer sees X amount of w-2 income and x amount of RE losses and you get hit with an audit, the key is to win it with no change, so that way the they can't audit you on the same thing for a few years.

I highly recommend creating summaries and calendars. I have a calendar for each one of my activities. I have several different sources of income.

Sorry I jumped around a bit, working and replying here.

Serge, the stay at home wife is possibly your lucky hand in doing fine. Now for the others if anyone has any questions don't hesitate to e-mail me if they need additional help. I'm currently working on several audits regarding this.

Review Jon's post very carefully that will be what helps you. However, the auditor may disallow the expenses completely based upon the fact you have a full time job.

Another thing; don't bring the auditor anything more than they ask for, and if possible have someone represent you. Because what they don't know helps you. Often topics are dropped because your rep does not know the answer. The last thing you want to do is go in yourself if at all possible.

Interesting situation. Depending upon the organization you could consider a rent to own situation with the fraternal organization as well.

Bill is correct; however there may be other increases or changes to the basis

either owner finance it, or cough up the difference