Charles Kim wants to ask a BP CPA a question.
Charles Kim owns two S Corps: Kim's Tae Kwon Do Inc. and Kim's Brokers Inc. in 2012, he W2ed himself $30k for both corporations. He has two 4th degree black belt instructors working for him and has a K1 of $70,000. He sold 10 homes and has a K1 of $70,000 in his real estate brokerage business. He owns 3 rental properties in Chinos Hills and 3 rentals in Moreno Valley for a total of 6 homes. In the entire year of 2012, he worked 60% as a real estate agent and 40% teaching martial arts at his Tae Kwon Do School in 2012.
Question for the BP CPA:
1. If 6 of his rental properties are valued $300,000 each. He is allowed a depreciation of $17,000 for each of his rental properties. How much of his 2012 income : 2 K1 and 2 W2 will his rental properties shield his taxes assuming he take no other deductions?
2. If his rental losses are greater than $75,000, is Mr. Kim eligible to deduct
the full amount against his $200,000 income: 2K1 and 2W2?