All Forum Posts by: Vlad K.

@Filipe Pereira , Thank you for the mention, my firend! 

@Billy Abildgaard . Hey Billy, from liability protection purpose, LLC does not become harder or easier to pierce if you have one person single member LLC or multi-members LLC. What's more important is how you handle business, and if you follow all administrative steps and formalities. WIth that being said, it is easier to pierce corporate veil of an S-Corp, because there are more formalities to follow.

From a tax perspective, LLC taxes as a partnership or an S-Corp (even if single member) is better than single-member LLC, because the more you distance yourself from your company, the less the risk of being audited.

Feel free to reach out if you'd like to talk in more details.

@Ben Kirchner, Although the effort to prepare your own taxes is admirable, you have to admit that if preparing a return which now has two investment properties makes you feel uncomfortable, may be it is the time to have a professional do it for you. 

Also, a professional will make sure that you maximize your deductions fully and, MORE IMPORTANTLY, correctly. 

True professional will make sure that the cost basis for your property is correct, and you are claiming proper amount of depreciation. 

There are just many nuances that you would not know, or would still require a professional opinion on. 

And then there is time... How long will it take you, how much effort will you put into your 2017 return? 

@Tony Hightower It sounds like you have a regular 401k with your employer with an option to convert to Roth 401k, correct?

Few things that hopefully answer your questions without too much details:

- You can have SEP IRA (could be your best bet), which is similar to SEP 401k in addition to your 401k at your employer,

 - Your employer's match would become taxable upon conversion to Roth 401k,

 - You can do partial conversion (unless your plan administrator allows only one type of account,

 - Any conversion will be a taxable even for you, full or partial, and could move you into a higher tax bracket and be taxed at rates higher than your normal rate would be. So, if you convert your $150k during 2018, your taxable income will increase by more than $150k if you itemize (due to potential phase-out of itemized deductions).

Hope this helps.

Please feel free to reach out with any questions.

@Mike Nelson There is a hope for you, as this is the first time you've been hit with the late filing penalty. 

Respond to the notice you received with a letter saying that you inadvertently failed to file the extension, because this is the first year you are filing the return for your company, and promise to be compliant going forward. 

Finish your letter by respectfully asking the IRS to abate any penalties associated with the failure to file on time. Also, ask them to contact you without any hesitation and include your contact information.  

You can also try calling the IRS first. 

If you're successful, IRS will waive the penalties and will send you another notice saying that it was one-time only forgiveness, and in case of any future missed filings you will be hit with stiff penalties.

Hope this helps.

P.S.: Did you register your LLC in 2016? You said that you started the LLC beginning of this year, but then your tax return for 2017 wouldn't be due until 2018.

@Marcus Johnson Sorry to disappoint you, but I think you are referring to corporate tax rate for C-Corporations, which will not impact majority of RE investors. I believe depreciation period will be reduced to 25 year for both residential and non-residential properties.

@Jack B. Hey, Jack, answer by @Michael Plaks is what you need to know. Main takeaways are: 1) it is not that simple as moving back into the property. IRS has some additional rules for that exact reasons, and 2) the property should be depreciated, and if no depreciation was taken, IRS will recalculate as if it was taken. In calculations of gain / loss on sale you should use allowed or allowable depreciation. 

@Caleb Heimsoth The limitations would apply to personal only. For real estate investors there would be no limitations.

@Steve Vaughan There are areas of the country where middle and upper-middle class will be affected negatively, where new standard deduction is not going to cut it. In addition, the double standard deduction is a scam, especially for families with children. If you pay close attention to your tax return, you get two deductions (currently) - 1) standard or itemized and 2) personal exemptions. 

Just to put it in perspective, say for a family of four:

 - 2017 standard deduction $12,700 

 - 2017 personal exemption is $4,050 x 4 =  $16,200

So, right now, at a minimum, a family of four gets a deduction of $28,900, which will be replaced by $24,000, as personal exemptions are eliminated.

Moreover, most families who own a house and living in states with income taxes do itemize. Taking a modest house purchased at $300k, mortgage interest is about $10k-$11k / year (relatively new purchases). Add real estate taxes and state income taxes, and for many families itemized deductions are north of $20k.

Without going into many more details:

 - winners: single, and families who do not own a house

 - losers: families who own a house

There are exceptions in the categories above, so this is just a broad generalization.

@Robert Church Unless you prefer face-to-face meetings with your CPA, you could also look outside CA in your search, as it doesn't have to be a CA tax accountant. If you decide to work with someone remote, the key is to make sure they are specialize in multi-state taxation and are proficient in CA tax laws.

Please feel free to reach out with any questions.

@Wei Xie I believe that provision is for non-mortgage debt interest (i.e. line of credit or note payable, car loan, etc.)

Clarification to my post above: the buyer's and seller's portions of taxes are pro-rated based on the sale date.