All Forum Posts by: Lance Lvovsky

@Cesar Bugarin

In scenario A you have a partnership structure with two or more members of LLC. In scenario B you are suggesting the Trust be the sole member, in which case the LLC is disregarded entity for income tax purposes. What you should also consider is the type of trust. To have a a Trust issue a K-1, needs to be a non grantor Trust, which has separate implications than grantor Trust. You should speak to tax advisors. Also consider potential state income tax filings and beneficiaries, and how cash flow will be distributed during life of asset and post sale. All discussions to be had with tax advisors.

@Andrew B.

Your home stare will generally respect income taxes paid to another state by providing an offsetting credit. There are nexus rules and the tax laws such to effectuate a double tax on the same dollar of income to not occur.

@Andrew Pettit

Clarification from several posts above regarding dividends: Certain dividends are qualified dividends and ARE taxed at the capital gains rate. This includes US corporations, certain foreign corporations (not all foreign, consult with tax advisor), and captive insurance companies (when structured correctly).

In recent years, the government has shifted to audit campaigns with sure fire wins for the government - areas such as foreign reporting (or lack thereof). Many folks do not realize the implications of having a foreign bank account, foreign asset, foreign income being generated, etc. Lack of reporting re: virtual currency is on the rise as well.

For rental properties, honestly if you are audited for this, then the tax preparer usually screwed up royally. Government will not spend resources auditing rental p & l. However, if you have certain elections such as real estate professional and W-2 income from an industry not related, be prepared for the government to come knocking.

I could tell you an audit is not a good experience. Not for you, nor for your CPA. I am fortunate that very few of my clients have ever been through it. But, I also do not sign off on returns that I know have audit red flags. There are certain triggers with the government, and knowing what these are has significantly reduced inquiries.

Best thing you can do as a taxpayer is keep good records, invoices, cancelled checks, time logs (if necessary), financials, etc.

Annual exclusion is currently $15,000.

Multiple ways to take advantage of multiple exclusions. For example, if you are married and have 3 kids, and each kid is married, you could give 6 gifts of $15,000 each, or $90,000. If there are grandchildren, this number is further amplified. Trusts could be setup. You could super fund a 529 plan. Bottom line is you need to speak to a CPA who understand estate/gift/trust tax laws.

It is certainly an option and when executed correctly, substantial tax savings can be had. You should be mindful of the requirements to the real estate professional election, material participation rules, etc. Your CPA can further advise you. You also want to make sure the correct entity type (if applicable) is setup.

Depends. Need to review trust agreement to see if creditor protected. Most irrevocable trusts for example that are properly drafted and creditor protected under applicable state law - bank will not mortgage to.

@David Bertolaccini

Parents can fund a trust with the real estate asset. Upon death, the asset can be held in further trust for benefit of children. Step up in basis accomplished. Capital gain allocated accordingly. Speak to a CPA for specifics.

@Sethmi Kachchakaduge

If a rental, then you can deduct in full.