All Forum Posts by: Christopher Smith

I do own out of state properties.

However, I'm not a big advocate of LLCs to begin with, and to me they are a total nonstarter for Ca residents (as I am).

What do I do?

I've acquired really good relatively new properties in much better than average neighborhoods. I have top shelf time tested PMs, and quality liability insurance fine tuned with umbrella insurance.

So I achieve asset protection the old fashion way, I earn it.

With that case, The Cohan Rule was established. It allows taxpayers to deduct expenses for business even if they do not have the receipts to document them. The ruling says that the expenses must be reasonable and credible, so you can't go saying that you spent $1,000 on a hammer.

"Regardless of where the trade or business of the LLC is primarily conducted, an LLC is considered to be doing business in California if any of its members, managers, or other agents are conducting business in California on behalf of the LLC."

Whatever the merits of Anderson's position might ultimately be, based upon the above I think its pretty clear that the State of California will assert that Ca Franchise tax is owed because you will be considered as conducting business in California on behalf of the LLCs.

So would you create an LLC and elect corporate tax status (most likely S Corp)? Sale of the property to a single member LLC would be disregarded without the LLC electing S or C corporation tax status.

Now you would have rental trapped in a corporation, is that acceptable?

If this works probably would want to ensure the price is arms length. 

I'd be interested in hearing other thoughts.

As an estate and gift tax advisor in a previous life this has been on the liberal agenda for 50 years, so in that regard it's really very old news. As I indicated before, the Democrats are going to have a very difficult time pushing this through an evenly divided Senate, and I'm not sure Biden will support it either (at least not in the form as presented in the link).

In reality I think it is at most an initial negotiating position or just as likely mandatory virtue signaling for those members of Congress on the radical left in there neverending effort to be holier than thou.

If the Democrats want to keep their highly tenuous control of the Senate they will need to come up with something much more reasonable.

Not sure it's a loophole, as long as the last months rent is so applied then it's not part of the refundable security deposit. This assumes the landlord can ask for first and last months rent under your landlord tenant act.

Just an FYI, thought I saw just this morning, that Cathie Wood's ARKK has lost over 40% of it's value since its February high. That's definitely hitting it out of the park, just in the wrong direction.

That should be enough to sober anyone up thinking that jumping in after staggering gains have already been made is a sure sign that they will continue. Not saying what will happen from here, but you should have your eyes wide wide open.

Most of the DSTs I looked at had so many internal fees that by the time you were figured them all in a large percentage of the tax savings was effectively lost. Not sure what that achieves unless you are desperate to get out of the saddle, and even if so there seem to be better ways (e.g., keep the property as a rental and get a good PM).

On what basis will they be able to take "immediate" tax advantage of the depreciation deduction? Are they all material participants in the activity, do they have other offsetting passive income, just looking for clarification? Just a word of caution. I might be a little reluctant to do much fist pumping until the relevant statues have passed, and then maybe not even then. Nails that haven't been fully driven have a nasty habit of attracting hammers.