All Forum Posts by: Josh Bauerle

Yes, an LLC can make a different tax election, which a rental company would never do. And either way, the LLC itself changes nothing with taxes. You can make a different tax election with or without an LLC. Which again, wouldn't happen in this case with rentals.

ALL LLC's are disregarded. The IRS does not regard LLC's as an entity. When you have an LLC with more than one member the IRS regards it as a partnership, not an LLC. And again, there are zero benefits under the new plan for LLC's as opposed to sole props. ALL entities, except C Corps, are pass through entities. This includes sole props, partnerships and S Corps. Regardless of which one you are, you will receive the 20 percent reduction of profits under the new plan.

I'm not trying to pick nits here, there's just a lot of bad info out there on LLC's when it comes to taxes. There is zero tax benefit to having one and the IRS doesn't recognize an LLC as a taxable entity, whether it is one member or one thousand members.

The one and only benefit to an LLC is the potential legal protection.

5 Votes

@Anthony Dooley Right but your LLC isn't the reason you file a separate return. Your partnership is. An LLC doesn't change a single thing with the way you file.

And even in a partnership the income is still mixed with your personal income on your return. It’s a pass through entity and your share of the profits or losses pass through to you the same way they would in a sole proprietor.

1 Vote

Originally posted by @Anthony Dooley:

I use an LLC to file a separate tax return instead of mixing it up with my earned income. The LLC is also useful to hide the identity of the owner. Tax records are public and I would rather people not know any more than they need to. The LLC owner can be looked up, but it is a layer. An LLC can help protect assets if you are sued personally. It will not, however protect your personal assets if the LLC is sued. The attorney will likely name the LLC, the owner of the LLC, the property manager, and anyone else they think will pay money to the plaintiff.

An LLC does not create a separate tax return. An single member LLC is still filed as a part of your personal tax return and profits from an LLC are still mixed in with your earned income.

1 Vote

Originally posted by @Martinis Jackson:

@Davidson Francois There are a number of benefits to establishing an LLC in real estate:

1) It will protect your personal assets from attack when you are doing business. For example, if you enter into an agreement under your own name, you are personally liable for any legal issues that arise from that transaction.

2) There are tax advantages to operating as an LLC as opposed to a sole proprietorship, specifically under the new tax plan.

3) It makes it much easier for you to partner with other investors on a deal. Usually, the investor will want to create an LLC for each project with an operating agreement governing the partnership.

I hope this helps.

An LLC does not actually provide any tax advantages whatsoever. Under either the new or the old tax plan.

An LLC isn't even a recognized entity by the IRS. It's what they call a disregarded entity.

1 Vote

There is zero tax benefit to putting your rentals in an LLC.

It will still get the 20 percent deduction if applicable and will be taxed as ordinary income.

0 Votes

As a CPA who has several clients that first used 1800 accountants before coming to us, let me just advise to run very far away from them. They are absolutely awful.

The price seems good, less than you might pay for a high level CPA, but their service is just atrocious.

2 Votes

Originally posted by @Jason V.:

Originally posted by @Bettina F.:

Have you ever adopted before? I adopted 2 preschoolers in the 1990s. Both the kids came with undiagnosed emotional issues that took a lot of time, energy and therapy. Your RE motivation slump may be a blessing in disguise.

Best wishes on your growing family!

Yep - all of our kids are adopted actually. We adopted our first daughter from Colombia in 2013, she's 8 now. Our oldest is 14, and our youngest is 5 - they were adopted at the same time from Armenia, and have been home about 2.5 years now. All three of our kids have Down syndrome, and the younger two are still non-verbal.

The son we're about to finalize the adoption of is 10, hard of hearing (potentially correctable) and has Cerebral Palsy.

And I completely agree, and really appreciate your tactful words of caution. If we weren't already experienced and comfortable handling children with histories of trauma and neglect, this adoption would weigh a lot more heavily on my mind than it does. As it stands, this is just what normal for us looks like - pretty similar to a family in their 4th pregnancy. Of course, most babies don't pop out the size of a 10 year old with all sorts of emotional baggage :-)

I don’t know what you should read for real estate motivation, but I’m confident the rest of the world should read this story for motivation on being better people.

My hat is off to you. Amazing, unbelievable and any other adjective I’m not thinking of.

1 Vote

Whether they are in your personal name or an LLC makes absolutely no differences.

All that matters is if it is an investment property or your personal residence. As long as it is an investment property there are zero SALT limitations.

1 Vote

Originally posted by @Michael Plaks:

Originally posted by @Lance Lvovsky:

Originally posted by @Michael Plaks:

@Lance Lvovsky

But do you agree that, until further clarifications, reasonable salary for S-Corp becomes even trickier - i.e. much more incentive to lowball it, leading to more controversy and litigation?

It depends. S Corp shareholders will want to ensure they get the benefit of the 20% deduction, and for many non-capital intensive businesses, such as mortgage brokers, real estate brokers, attorneys, physicians, etc., it will be important to pay a salary sufficient so to get the 20% deduction.

No salary is required under the threshold.

Yeah the real interesting scenarios are going to come from the small business under the mandated 50 percent of salary requirement for the QBI deduction. The majority of my clients will fall in this level so I’m very interested to see how this develops.

0 Votes

All Forum Posts by: Josh Bauerle

Josh Bauerle has started 4 posts and replied 42 times.

Post: What’s the purpose of an LLC???

Post: What’s the purpose of an LLC???

Post: What’s the purpose of an LLC???

Post: What’s the purpose of an LLC???

Post: What’s the purpose of an LLC???

Post: Rental Properties in LLC for new tax bill purposes

Post: 1800 Accountants vs Local

Post: Book Recommendations to Re-Light the Fire

Post: SALT Deduction Limitation Question

Post: QBI calculation for Sch C - accountants are confused, too