All Forum Posts by: Jasper Cooper

@Account Closed

@Patrick Drury

Thanks both of you. My accountant says that (to his knowledge) since my wife is a real estate professional, the gains from the sale would count as ordinary income and therefore could not be used to offset stock trading losses.

I guess I'm looking for either a more-knowledgeable accountant, or a work-around. This is enough money involved that it would be worth switching accountants to one who knows how to do this.

I had significant losses from the stock market from stupidly selling at the wrong time. Most were held less than a year.

This year I am selling an investment property. I’m trying to decide whether or not to do a 1031 exchange.

Would I be allowed to use the capital gains from the property sale against the stock market losses? My wife is a real estate professional.

Thank you all!

Hello Eammon!

Thank you very much for your reply earlier.  The IRS website says that "services of a child under age 18 aren't subject to Social Security and Medicare taxes."  

So I think what I would need to do would be to pay my daughter through a payroll company, but without paying social security and medicare taxes.  I think payroll companies start at about $30/month, so it could be worth it. Am I missing something?  

Thank you very much!!!!

Thank you very much for your help!

Hello,

After hearing about it on Tom Wheelwright's podcast, I want to hire my daughter to help out with our real estate business.  She is a mature 7 years old, and would do great at cleaning the hallways and common areas of our buildings. And I know she'd love to make some extra spending money.  

Does anyone know what I need to do to hire her?  I own the buildings through several single-member LLCs, but I do not have a management company (my wife manages the buildings).  

A few questions:

1) Do I hire my daughter as an employee or as an independent contractor?  We currently don't have any employees, so independent contractor would work much better for us

2) My understanding is that payroll taxes (social security, etc) do not apply to children employed by family businesses. Is this correct?  Does any withholding apply?

3) Are there any labor laws that I need to be aware of?  We live in NYC.  My understanding is children of any age can be employed in family businesses in NY.  

Basically I would like to write her checks as an independent contractor (as she performs the work), with no taxes paid as long as she stays under the standard deduction of $12,400.00 per year.  Is there anything I need to be aware of for this?

Thank you all very much!

Thanks @Ashish Acharya for your help again!

We would probably not qualify for financial aid if I still have my job when my kids start college.  However, this is many years down the road and I may no longer have a high-paying job by then.  

I might be viewing this incorrectly, but i would think that our real estate would be included in the college financial aid "small business exclusion" since my wife works on them full-time (and it is therefore active income). For us, real estate is a small business, not an investment. Excluding real estate and retirement accounts (also not included in financial aid application), our net worth is low. 

Do you have any other ideas for tax-advantaged account in which we can buy stocks or mutual funds?

(Information about me and my family should be viewed as theoretical and does not necessarily reflect our true financial situation)

Thanks @Bernard Reisz and @Yonah Weiss

Bernard, I don't understand your questions.  

When you mention the recharacterization of income, are you referring to recharacterizing it as active instead of passive?  The (negative) income from our real estate investments is already active (rather than passive), since my wife is a real estate professional.  Or are you referring to something else?

We just contribute to a normal Roth IRA. Are we doing something wrong? My income is only partially offset by the real estate losses. We report net income higher than $0 but lower than the $193,000 maximum to contributed to the Roth IRA.

Thank you very much!

(Post should be viewed as theoretical and does not necessarily reflect our true financial situation)

Thanks @Yonah Weiss!  I look forward to Bernard's ideas!

Sorry i forgot to tag you both in my last reply, @Steven Hamilton II and @Ashish Acharya.  

Thanks in advance!

Steven and Ashish,

Thanks for responding so quickly!  

Steven,

I'm quite sure the taxable income losses are due to depreciation.  We've hired an engineer a few years ago to value various components in our buildings to speed up depreciation.  We already max out both of our Roth IRAs.  Any other ideas?

Ashish,

Good to know about the rental income not qualifying.  Can we use the real estate business to hire my wife as an employee, and then contribute her salary to a solo 401k?  Would it make any sense to do something like that? 

We prefer the long-term returns of stocks over Munis or Series EE bonds.  

We are worried that college education funds could negatively impact our ability to obtain college financial aid, particularly if i quit/lose my job/retire prior to our kids going to college.  

Thank you both very much!

(Post should be viewed as theoretical and does not necessarily reflect our true financial situation)