All Forum Posts by: Gregory Wilson

Actually, I think you missed my point. There is a difference between delivering a baby and being pregnant.
The doctor delivers the baby. For some women, doctor is not required, they drop it in the field. But, still mom doesn't know squat about delivery. Only the doctors many of whom have never been pregnant know anything about delivery. On the other hand, the midwife or pregnancy nurse counsels the pregnant woman. And, I think most women would choose a midwife that has gone through pregnancy.
Like the OBGYN situation, there is a lot a CPA may not know about the rental business from debiting and crediting some journals and filling out line 242 on some Turbo Tax input form.

And, understanding the operating details of the rental business are just as different from preparing a tax return as being pregnant is from delivering a baby. 

Interestingly, attorneys are not permitted to offer services to strangers except by general advertising. Most jurisdictions have adopted ABA Model Rule 7.3 which makes it an ethical violation.

As for the reason some clients want CPA's who have real estate investments themselves, CPA's can be experts in all kinds of things but not in all things. A person who has spent his 2000 to 4000 minimum CPA practice hours doing foreign currency conversions at Deloitte for a Belgian energy company may not know the first thing about real estate or anything else. And, even if he has real estate clients, doing a tax return doesn't really educate one. Doctors who deliver babies learn how in their OBGYN rotation and midwives counseling pregnant women are mostly mothers themselves. So let's not be too hard on clients who want someone with hands on experience.

Commission on $1,000,000 sale @ .1% = $1,000.00
Suggested Tip                                        = $59,000.00

I'd like to suggest that you DIY this bookkeeping task. At least until you get 25 doors. It would not be challenging for a high school student (if we could ever get one of them to put their phone down). Moreover, you will learn more about your properties and your vendors.

With 3 rental properties, unless there are a lot of doors, you will have 100 checks per year. You might still be able to buy a nonsubscription, licensed and unused version of Quickbooks on Ebay, but even with the subscription it will only cost $1500 per year and you will be in control of not only the payments but also the check writing. It is beyond simple. And, at the end of the year you can email a backup file of QB to your tax preparer and he will give you the journal entries to post his corrections and depreciation.

A bookkeeper will charge $300 to $600 per month to write 10 checks and make a couple of deposits and complete a rental income spreadsheet or checklist to keep track of rental payments. And, you will have to make every decision anyway and also worry about her accuracy and honesty.

That is sort of the social studies class answer. Actually, it is the President who drives tax policy. there has never been a major tax bill that was not initiated and supported by the President that I can recall. Yes, legislation is passed by Congress.

Trump got significant tax reductions in his first term when essentially all demorats proposed tax increases.

Of course, we don't want guess work, but we also don't want to ignore the direction that the tax policy will be headed. And, with Trump we know that policy is lower taxes and a more favorable climate for business.

As long as the management company is a "break even" operation meaning that you only charge your own rental properties the amount of the management company expenses there won't be self employment taxes. And, importantly, suits by tenants are against the captive management company that has no assets other than the current month's income and the tools and vehicles needed to manage the rental properties. This is important because it is pretty easy to get an uninsured claim (I can give horrible examples (like the handyman nailing the upper windows shut to keep people from tossing stuff out the window, or sending him to pick up some stuff from the hardware store in his wife's uninsured car, or any circumstance of punitive damages which are not insurable) and which claim if brought against the entity owning the real estate would cost you your equity. Tenant's sue the company that is the landlord on the lease. That should be the management entity.

I recommend that the CPA you consult for strategy is not your tax preparer. Circular 230 removed any aggressive strategies from tax preparers. Just read it and you will see that a person preparing a return for money has more to lose in a dispute with IRS than you do. Hence, they no longer give independent advice. Keep your current tax preparer and consult with a different CPA or an attorney.

I think they all missed the most important point. Everything else is the same. But, in Ohio creditors of members (you run a semi into the median with $5mm of electronics inside and you have $100,000 of property damage coverage) in Colorado they take your membership interest. In Ohio they don't. In Ohio a claim on future distributions of the LLC (a charging order) is the exclusive remedy. Also, Ohio does not allow "piercing the corporate veil" unless you commit fraud or a crime.

As much as I hate annuities, you might speak with an annuity agent about the employer awarding a bonus in the form of a single premium deferred annuity invested in index funds and that you do not have the right to access until a date certain and then a full payout over time. But, you can't have constructive receipt.