S-corp tax filing for uber and flipping house(3 years held)

4 Replies

I have a single member LLC that is taxed as a S-Corp in which I flip homes and drive for Uber. I purchased a property in 2017 and finally sold it in 2020. I sold it for less than what I bought it for. I have filed the 1120s each year but I never included the expenses and writes offs for the property. The 1120s just reflects the income and deductions for Uber. Now, that the property is sold, I am aware that I need to figure out my cost basis and account for all the property's expenses, closing costs, etc. A previous CPA told me to not write off any expenses for the property until it was sold because it would help offset the capital gain from the sale. Except, it's a capital loss for me. Now, I have 2017-2020's expenses to account for on this year's taxes. The property was sold for $60,000 less than the purchase price. My situation is sort of complicated because of everything that has happened. The CPA who I was using did some bad stuff so I am just trying to figure out this dilemma the best I can. Thanks

Do I still need to account for cost basis even though I sold the property for less?



Originally posted by @Earl Stewart Jr :

I have a single member LLC that is taxed as a S-Corp in which I flip homes and drive for Uber. I purchased a property in 2017 and finally sold it in 2020. I sold it for less than what I bought it for. I have filed the 1120s each year but I never included the expenses and writes offs for the property. The 1120s just reflects the income and deductions for Uber. Now, that the property is sold, I am aware that I need to figure out my cost basis and account for all the property's expenses, closing costs, etc. A previous CPA told me to not write off any expenses for the property until it was sold because it would help offset the capital gain from the sale. Except, it's a capital loss for me. Now, I have 2017-2020's expenses to account for on this year's taxes. The property was sold for $60,000 less than the purchase price. My situation is sort of complicated because of everything that has happened. The CPA who I was using did some bad stuff so I am just trying to figure out this dilemma the best I can. Thanks

Do I still need to account for cost basis even though I sold the property for less?



Yes you need the basis to calculate the losses. And looks like you already have the basis as you mentioned that your loss is 60k. You wouldn’t know the loss without knowing what your cost/basis is.  Also, the balance sheet per your prior return should have your basis until 2019 if it was filed correctly. 


Also, it’s not a capital loss. It’s an ordinary loss. The ordinary losses are good because they are not limited. The Capital losses are limited to 3k a year. 

 

@Earl Stewart Jr

If your CPA messed up your prior tax returns (I don't know if he did, just working off of your statement) - then you need to find a good accountant instead of trying to DIY it and probably make it worse.

Yes, you need to take your selling price and subtract all costs for the 3 years. This calculation is not as simple as it sound though. The correct result may not be the $60k that you figured.

I also see no point in an S-corporation for a typical Uber driver. Again, I would not DIY this.

Thanks for the response Michael. My CPA said it would be a better tax savings if I placed Uber with my S-Corp. It's more of a tax savings. My income would be from flipping and Uber. Instead of having all the Uber income taxed at 15.3%. I have saved some money but not a huge amount. I am not trying to do this return on my own because it's too complicated. I am just merely looking for insight. I would have a better idea when I see a CPA to handle my situation. This was my first project and I got screwed over by multiple people. I just want to do this the right way and move on. 



Originally posted by @Michael Plaks :

@Earl Stewart Jr

If your CPA messed up your prior tax returns (I don't know if he did, just working off of your statement) - then you need to find a good accountant instead of trying to DIY it and probably make it worse.

Yes, you need to take your selling price and subtract all costs for the 3 years. This calculation is not as simple as it sound though. The correct result may not be the $60k that you figured.

I also see no point in an S-corporation for a typical Uber driver. Again, I would not DIY this.

 

Originally posted by @Earl Stewart Jr :
Thanks for the response Michael. My CPA said it would be a better tax savings if I placed Uber with my S-Corp. It's more of a tax savings. My income would be from flipping and Uber. Instead of having all the Uber income taxed at 15.3%. 

What you're referring to is the self-employment tax on your net Uber income. "Net" means after subtracting all expenses, including the expenses of using your vehicle. For the majority of Uber drivers, the net income is not that high, under $10k. An S-corp will create more cost and hassle than what you could save on the self-employment tax here. 

And you're not saving anything on the income tax with an S-corp, only the self-employment portion, aka Social Security/Medicare tax. If your net income was $50k (either from Uber or from flipping) - then an S-corp could make sense. In your case, it only created more cost and complexity, I'm afraid. Also, it's a bad idea to mix too completely unrelated businesses in one entity.