All Forum Posts by: Lance Lvovsky

@Jaleh Afrooze

CNN doesn’t know tax law and that is just a political article. They are referring to the excess business loss limitations under 461(l) which was encacted under the tax cuts and jobs act. The stimulus bill temporarily halts this limitation which limited taxpayers from taking losses in excess of 500K (married filing joint). My advice: read CNN if you want but run away from any articles that discus tax laws. They are attacking a political party in that article. No surprise.

@Heath Jones

What does the engagement letter say? What is the scope of work? If they didn’t give you an engagement letter than shame on them. I don’t know what questions you asked so I have no idea whether research was required or not. As for tax preparation fees, it is difficult to say. Fees are very dependent on books and records. If your books and records are good then maybe that is a little high but if your books and records are bad, then that is not high.

@Michael Ablan

For most investors, this will not work because they are per se passive with respect to their rentals per IRC 469. The tax law disallows passive losses to be deducted unless there is passive income (small 25k exception for certain taxpayers) For this to work, you have to be nonpassive with respect to your rentals, and rise to the level of material participation. You would need to qualify as a real estate professional under the tax law which is a 2 prong test. This is rather complex and I urge you to consult with a CPA.

Fees depend on scope of work. Every engagement is different. Sorry, I know that does not answer your question.

When it comes to businesses, buy-sell agreements take precedence, if they are in place. In a syndication, often investors will invest through their entity, or through a Trust. When investing through a Trust in a business and there is no buy-sell agreement, the Trust agreement dictates how that ownership interest passes. As mentioned above, there are certain elections that you want to discuss with your CPA (assuming you are syndicate sponsor) to maximize date of death step up in basis of the asset(s). And yes, investors can form an LLC. Many of my clients invest in a single-member LLC for example, and that single-member LLC is owned by their Trust.

Based on the facts you presented, I would take the position it is a long-term capital gain. Ask your accountant how he (she) supports their position for this to be ordinary income. Maybe there are other facts he(she) knows about your deal, but it sounds like capital gain to me. 

@Taylor Eldredge

Yes tax day is postponed. That does help us all.

As mentioned many CPAs on here. Contact a few and take it from there.

Work with a CPA/tax advisor as there are ways to offset tax in one country with tax paid in another, and you may be eligible for certain tax credits. Canadians want to make sure they are utilizing the proper legal entity vehicle for investing in the US.

If you will have foreign investors investing in your deals, and contribution capital to your LLC/Partnership, there will be additional tax filings the LLC will need to consider, namely Forms 8804/8805, and requirement for you to withhold quarterly on income sourced to your investors. You will want to work with a tax advisor to ensure you are in compliance. Your investors may also need assistance obtaining a tax ID (ITIN) from the IRS, which a tax advisor can assist with. Your investors will also need to file a federal individual income tax return, and possibly state returns as well, based on which state you are operating in.

Again, a good CPA can guide you and your business to ensure you are in compliance.

@Shafi Noss

25% is correct.