All Forum Posts by: Jeff Nash

A partnership (general or limited), multi-member/manager LLC, or even less formal joint venture are flexible in nature so you can allocate the sharing ratios (capital, profits and losses) any which way you agree upon and changes can be made based on facts and circumstances in any given year (ie - you make special allocations). I think your decision on what's reasonable and fair and how you decide to operate heavily depends on the 2 factors you noted - your time and effort and expertise and the capital at-risk to your potential partner. How would you go about assigning the value to what you offer which is more subjective compared to actual dollars committed (could be equity or debt or a combination to your partner)? I would suggest you formally execute an agreement (file with the Secretary of State, get an operating and/or partnership agreement, open separate bank accounts in the name of the entity, maintain minutes and document key decisions, etc) and work with an attorney and/or tax professional (CPA and/or EA). They will quiz you on your goals, objectives, time horizon, pros and cons of different ways to operate from a legal and tax perspective, etc so you can do what's best in your opinion and unique situations.

Alex, it would be treated the same as it had been before (taxable ordinary income). I assume you asked the question because you are curious if there are continued tax benefits like tax deferral with an IRA rollover.

@Denver McClure

What someone seeks out an advisor for varies based on their age, risk tolerance, investment objectives, and most importantly, their goals.  Some advisors are holistic in nature and some have a more singular focus.  One thing that all advisors have to do is manage expectations and the psychological aspect of financial decisions.  I think it's safe to say that we all can be our own worst enemy and make decisions that are not always rational.  That's where the advisor comes into play.  He or she should have adequate experience and training to help talk through various scenarios, make decisions on your behalf if there is discretion, and help build your wealth depending on your goals and things unique to you.  You arguably will have a better chance of success if you don't go at it alone.  It's like going to the gym or working out, if you have someone to work with your chances of sticking to it and motivating or having healthy competition increase and so your performance should be better.  I think I'm reiterating what @Andrew Bosco is stating about piece of mind.  

On a side note since we taking part in a real estate forum, an advisor that supports many different asset classes and is multi-faceted can help you with due diligence and seek out alternatives for you so once again, it's not all on you.  Saving you time, giving you ideas, and helping you make the right asset class allocations over different periods of time is the value.

You don’t have to amend prior tax returns but a change in accounting method (Form 3115) and catch-up adjustment (481(a() would need to be calculated and reported.

He needs to get connected with someone that can ask him about his goals (including legacy planning), analyze his statement of net worth and tax situation, etc.  Some of the preceding comments might work in part or entirely but as any CPA will tell you "it depends".  It sounds like he has plenty of directions to go in which is a plus.  Those professionals you mentioned should all be working together and not individually.  Communication usually is the problem of why things do not get done properly as the smartest folks are not in the room at the same time to hash things out.

Deloitte is an international firm and a part of the "Big 4" accounting firms.  They have a slew of resources and professionals, some in very niche and specialized areas.  It sounds like they will provide the tax compliance or preparation work for you, but my hunch is they will not include planning for free which is where the real value is.  I would inquire about the scope of their services and ask what and how they charge for tax planning.  Normally the Big 4 focuses exclusively on the largest public corporations and private entities as well as high net worth individuals.  If they are not able to help you beyond compliance then you can find a CPA/EA or other tax consultant to bridge the service gap.  

I don’t know the nature and extent of your RE business or layout and set up of your home office space, but you can get plenty of details by looking at Publication 587 which is devoted to this issue, and looking at Form 8829 where the deduction is calculated.  Google them or just got to irs.gov.  You can message me if you have any other questions.  

@Jason Norris

I am curious first about your motivation and reason for raising the question.  What are your concerns?  How is the property going to be purchased (cash only, mortgage, etc)?  I agree with @Becca F.and am inclined to suggest you just keep it simple right now unless you have some compelling reason (might just be personal preference) to want to form an entity such as an LLC (for long term rental nix the corporation straight up as an option).

At this time too I would assemble a good team of professionals like an attorney (or more than one perhaps), tax advisor, and insurance agent and communicate properly so they all are aware of any actions taken or even not taken.

As a side note if this is a concern -  in my opinion, some of the steps or measures  sometimes taken to achieve anonymity might not really be effective or necessary and add cost.  If someone wants to find you, they probably can and will.

Hi Mike, there is no IRS approval letter that you receive (say for like an S-Corp election) but you take the tax position that your transaction meets the merits of a 1031 exchange when Form 8824 is filed. Obviously the exchange documents (agreement, ID letter, etc) and tax return have document retention requirements and those would be needed to facilitate any IRS or state tax inquiries.