All Forum Posts by: Bill Walston

Originally posted by Kyle Meyers:

I think the reason many people go to certified mail for legal notices is that in many places the law specifies certified mail be used. I will be checking with my attorney, but I believe for my purposes there is no reason a different service with signature and/or delivery confirmation wouldn't work.

Exactly right Kyle. Your attorney said that certified wasn't required. I think his suggestion for certified was so that your tenant couldn't dispute receipt of notice. Any delivery requiring a signature would do that.

Originally posted by Kyle Meyers:

Also, if I pay a corp, do I have to have any kind of proof it was a corp?

I suggest you have any non-employee performing services for you complete a W-9 form. I do this before they complete any work, regardless of how much they may be paid during the year. This way, if I do pay them $600 or more during the year I don't have to track them down for the info. I already have it on file.

You can check out the W-9 HERE. You'll notice there is even a place for the owner of an LLC to indicate the taxable status of the entity.

Originally posted by Kyle Meyers:

As I understand it, 1099s are required for anyone I pay $600 or more during the year for my rental property investing.

Right, any non-employee that you pay $600 or more for services performed during the year. For us rental property investors that could include work for plumbing, electrical, carpentry, equipment maintenance, accounting, gardening, property management and similar services.

Originally posted by Kyle Meyers:

I have a few questions about the exceptions though.

1. Do 1099s have to be sent to cities or counties?

No.

Originally posted by Kyle Meyers:

2. If I pay an LLC which is owned by a corporation, do I have to send a 1099?

If the LLC is treated as a corporation, then no. If treated as a sole-proprietorship or partnership, yes. (And yes, it is your responsibility to ask for the status.)

Originally posted by Kyle Meyers:

3. Do I issue 1099s to non-profits?

No. They are not considered to be "engaged in a trade or business."

Hope this helps :)

Originally posted by Carole M.:

I guess my questions is: The Partnership was only for 5 month/20 days in 2011, can she file a Partnership Return for the Calendar Year 2011? What forms should I expect to received other than the Partnership Return and K1's?

I would appreciate any information you can provide.

A 1065 SHOULD be filed for 2011, however it will not be for a calendar year. It would, instead, be a final short-year return. The "partnership" effectively ended on June 20, when you sold your membership interest to your sibling.

Your sibling would, on that same date, begin operations as a single-member LLC and would report any profits and losses from that date forward accordingly.

Originally posted by Kent R.:

I thought we stated the same thing and were in agreement on which entity to use for short-term and long-term holds.

You're right Kent. Michael, your CPA and Steven did, indeed, all say the same thing: S-Corporation for "flips;" LLC for "buy and holds." Sounds like you have a CPA who is "in the know" with respect to best entity structure for your investing strategy. And that's a good thing :-)

Originally posted by Steven Hamilton II:

Bill here is my reasoning.

First you do have to remember there are more than just a land trust. With certain types of trusts he could be required to file an additional tax return of which the income would be subject to a MUCH higher tax rate.

Now assuming a land trust; that will be disregarded and yes the expenses will be reported on the Schedule E. The same will happen with an S-corp.

Aside from the tax perspective. As we both said the LLC will provide liability protection while the Land Trust will provide privacy.

I am simply stressing the distinction.

aaahhh. I see. Then if you are talking about an irrevocable trust, then I would agree there is an added cost.

When we real estate investors talk trust, though, we are usually talking revocable land trust. I didn't see the distinction you were making as your statement only said "from a tax standpoint, go with the LLC as it will also save you filing costs and save you money." My bad...

Originally posted by Steven Hamilton II:

From a tax standpoint, go with the LLC as it will also save you filing costs and save you money.
-Steven the Tax Guy

How so Steven? Assuming that Chris is talking about what is commonly called a "land trust," both the trust and the LLC are disregarded entities for tax purposes. Accordingly, the rental income and expenses are reported on Schedule E, thus the entities are essentially identical from a tax standpoint.

The LLC will have both the formation costs and annual filing fees paid to the state. There are no such costs for a land trust. It seems to me that the LLC is the more costly of the two.

That being said, a land trust will provide privacy while the LLC provides the asset/liability protection. The usual recommendation is that they be used in tandem with a land trust owner and LLC beneficiary.

Originally posted by Bobby Walters:

Hi - I'm a relatively new investor and am looking to get my accounting in order. Does anyone have a spreadsheet or other tool the could share that you use for tracking income, expenses, P&L, etc for your properties? I'm looking for something where I can track this on a per property basis.

Thanks!

Hey Bobby - I just uploaded an excel spreadsheet that I used a few years back. I used a separate file for each property. As your portfolio grows this will probably become a bit cumbersome, but it should work fine for now :-)

Let me know if you have any questions.

Admin Edit: Here's the link: Rental Income and Expenses

Hi Jhansi - Does the lease address the tenant abandoning the property? Most do (all should). If not, your friend's best bet is to consult his real estate attorney.

Ryan - You need to consult an attorney ASAP! Your property manager now owns what was your property. I hope that you are able to resolve this.