All Forum Posts by: Christopher Smith

That then would be the same due diligence you have already applied to your other activities now applied to what would presumably be your partnership agreement if it is your intention to create one.

However, you don't necessarily need an LLC to create a partnership, and to take that one step further you don't necessarily need a partnership to have a joint business activity with another party.

Sure 

1) Select and aquire solid properties built by top shelf home builders

2) Acquire these properties in good neighborhoods that attract quality tenants that have an incentive to protect their own reputation so they won't destroy yours or your property or engage in conduct detrimental to all.

3) Put into place solid property management that understands that their role isn't just to collect rent and fix toilets, but to protect you from liability in all areas that flow from property management like fully vetted tenant selection processes.

4) Adequate solid property casualty and liability insurance for each property.

5) As/if necessary umbrella insurance coverage tailored to your personal risk profile and risk mitigation goals. 

If I had a nickel for every Yahoo on BP that thought an LLC was the answer to all his real estate dreams I'd have Bill Gates money.

In my opinion never has so much been spent, by so many, for so little.

Its become little more than an emotional crutch that provides an excuse for irresponsible property selection and management which long term may actually be counter productive as far as true risk mitigation is involved.

Do you really need an LLC? I've been invested in OH rentals for well over 20 years and am a CA resident. I have absolutely no need whatsoever for an LLC and am very glad I don't have one because of the expense of setting it up, the ongoing filing fees and the fact that my insurance provides far more than adequate liability coverage.

Another wonderful LLC benefit, and there are so many just like it.

The payment would need to arm's length as the activities appear to give rise to controlled transactions. The passive activity rules might additionally address related party transactions as well, I'll let the cpas provide input there as appropriate.

When I indicated above to reduce the tax basis in the property by the excess reimbursement I assumed you wouldn't be claiming an expense for the casualty as it was paid by insurance. If you do claim a repair expense for the casualty (or capitalize as appropriate) then you would need to reduce the basis by the entire reimbursement amount (as described in Michael's more complete explanation). 

So it comes down to an issue of timing.

And inexcusable stupidity would be the retaining of an attorney without the necessary background due diligence,

the self acknowledged ignorance is exclusively your's my friend.

Look at reducing the tax basis in the property for the excess recovery.

Sounds like a complimentary business model, many of the dedicated Pizza patrons trending toward corpulence ultimately becoming diabetics and thus may need dialysis. 

One stop shopping.

I don't think whether or not you have an LLC changes anything for tax purposes, the properties are inventory and to clearly reflect income the costs associated with each property would need to be separately accounted for and are ultimately expensed to COGS only when the property to which they have been recorded has been sold.