All Forum Posts by: Jeff Nash

The ASCSP website https://www.ascsp.org/about-th...might give you some insight into what topics and areas practitioners need or should be knowledgeable.  There are some very specialized firms that perform cost segs as well as public accounting and tax firms. It is a unique skillset of someone well versed in a blend of tax and engineering/construction.

I would go back to the original preparer for sure  and explain the situation and hopefully they will not charge you so much that the cost outweighs the benefit. If it’s an innocent omission and an expense that you can easily substantiate I would not be dissuaded from amending the return due to any perceived audit risk if all else is good and you are confident in any tax positions taken, as applicable. 

It looks like you both share responsibility in this situation - you didn't provide the information and the tax preparer neglected to do a simple comparison of the prior year to the current year and ask you the question about why there were no HOA expenses.

The original preparer already has the inputs in the tax software and presumably did the other required due diligence. If you have another preparer do it, it’s almost as if they are redoing the return and having you complete an organizer, collecting your tax documents, making inquiries and documenting. entering data into their software, etc so the cost should be more. You could also do it as well if you believe you are competent enough and think it’s worth your time.  My guess is that this is not really a good option though, but it’s an option. 

Perhaps this tax year you consider other alternatives if you don’t have a long-standing relationship with the tax professional or organization.  You might just chalk this up to a minor mistake though and don’t believe it is indicative of other potential issues based on your tax situation.    

Based on your fact pattern (was a personal residence first and then a rental, not vice versa) I think you might be looking better. That non-qualified use provision was written so that taxpayers couldn't convert highly appreciated rentals to personal residences, live in it for 2 years, and avoid paying any capital gains. So I think you might have misinterpreted what it was saying and it  might make sense if you read the worksheets carefully - you do not include any period of non-qualified use that occurred after the last day that the taxpayer or spouse used the property as the principal residence during the 5-year period prior to the date of sale. You count the days backward from the time of sale to address your last point. Hopefully you will be pleasantly surprised with the outcome.

A custodian has to be involved similar to a SDIRA.  This is not as prevalent as 401K or IRAs, but nevertheless can be used.  I think the reason is that HSA's really have not been around for that long (just over 20 years) and the contribution limits are not high relative to 401K and other DC/DB pension plans.  

I'm a little pressed for time but check this link - https://www.irs.gov/businesses.... and Publication 523 for more information. 

If you do not want to rush and ensure there nothing is inadvertently omitted or inaccurate, you can file an extension.  If you believe you have paid in enough to date through W-2 withholding and the expectation is that you will not owe considerably more that might be an option.  I do not know your tax situation, but I know most tax professionals are fairly busy and normally do not guarantee they will be able to file by the original timeline.  I'm only on here to take a quick break!

@Jennifer Blanchard here is a tax directory (https://www.biggerpockets.com/...) where you can locate some folks that might be able to help. Whether you work with someone in person or remotely is just a matter of preference and personal decision to you.  With virtual meeting capabilities it probably is not as necessary to have someone within close proximity, but you need to make the call.   

@Joe Lijoi @Chris Davidson raised very good questions as more information is needed. Is this a buy and hold (you are investor and the asset is a long-term depreciable fixed asset) or fix and flip (you are a dealer and the asset is inventory)? Is is a multi-member or single member LLC? What are the nature of the expenses and how much are they? Feel free to elaborate here and/or message me, or consult with your current tax professional.

@Neetu Dsouza you can only apply 1256 losses against 1256 gains so if you didn't have any in the prior year then there is no  tax benefit from a carryback.  Interesting question on a real estate forum, but I assume you have a well diversified investment portfolio! 

@Account Closed I chose to use the words "be careful" in this particular post as things often are not as simple as they appear and there needs to be thorough discovery of the facts and circumstances underlying a person (or taxpayer's) situation before making a suggestion or firm recommendation. I often find myself using similar phrases like "it depends", "maybe", "it's a gray area", "in general", "it might be aggressive", which seem to be a part of an accountant's vernacular as an inherently cautious group.  I "generally" don't find myself personally speaking in absolute terms.    

Knowing that people's goals, objectives, risk/reward profile will often differ for any number of reasons, it is important to fully understand their background and then educate them on the alternatives with their respective pros/cons.  I do not believe I can say with any certainty that if you do this one thing, every problem or pain point you have will be solved or simply go away.

Full disclosure, my wife is a 1031 QI so I am balancing my comment and any opinion here and doing my best to be objective and lessen any conflict of interest.

So if I focus on real estate and the issue of mitigating someone's tax situation, the 1031 exchange has been the most widely accepted and used strategy since inception over a century ago.  Non-real estate folks will look at you funny (dog turning their head to the side) if you bring it up, but most in the real estate community have come to know about it to some degree or another.  It is highly effective if done right (follow the rules and form and procedure) and "generally" it is not expensive to implement, even if done on a repeat basis, when you compare it to the ordinary costs of doing real estate transactions (i.e. - real estate agent commissions, loan origination fees, title insurance, etc).  It has it's own tax form (8824) dedicated to reporting it and "generally" won't raise red flags. Is it perfect and should it always be used, absolutely not.  There are certain potential cons like the 45-day rule, 180-day rule, same taxpayer rule etc that can make it challenging to implement at times.  Alternatives to it for tax mitigation could be the 721 exchange, qualified opportunity funds (opportunity zones), 121 exclusion (in conjunction with 1031) or perhaps what you are suggesting with some form of trust, without having or knowing the details.  It "just depends" on someone's situation. 

As a side note, but pertinent to this discussion, an estate planning attorney that I collaborate with posted in a public forum inquiring about the merits of a particular trust which I had come to be familiar with years earlier. I had not recommended it to any clients after doing my own due diligence because I thought it "was too gray" and would have raised the risk of audit and all that comes with that (taxes, penalties, interest).  Personally if I did recommend it I would have benefited financially as it involved using life insurance for which I am also licensed.  Anyway, the creator and promotor of this strategy had to endure years in tax court, but eventually it resulted in a somewhat favorable outcome.  He and those that adopted it were very fortunate to say the least, but there are numerous others in the past that have not been.  As a tax professional, I was not comfortable with making a recommendation that was very tenuous as in this example. It was not a time tested and widely accepted strategy and took rounds of tax court to prevail.  It was a bumpy and rough ride.  Does that mean that if something is gray or "aggressive" that you should not consider it?  No.  "It depends" on the taxpayer and making sure they fully understand the ramifications of any decision.  If something is not time tested and is an emerging area it does not mean you should not engage in it, but you need to understand and be willing to accept any potential risks.