All Forum Posts by: Michael Plaks

@Ryan Braman

Look at these threads, among many other similar ones:

https://www.biggerpockets.com/forums/51/topics/795929-questions-to-ask-a-potential-accountant
https://www.biggerpockets.com/forums/51/topics/792277-how-to-test-your-cpas-technical-competence
https://www.biggerpockets.com/forums/51/topics/498175-questions-to-ask-prospective-real-estate-tax-cpas

It sounds catchy but is incorrect. 

Bill Belichick has never played professionally, yet coached his teams to multiple trophies. Countless other coaches did, too.

@Joe Livsey

Start your NY CPA search with @Nicholas Aiola and @Basit Siddiqi.

As @Bobby Lee explained, you're entitled to deduct tools used for business. When you also use them for personal benefit, you're supposed to deduct a business portion. It is subjective, just as using your laptop and your phone. Investors like to claim that their tools and equipment are 100% business, and some accountants look the other way on such stretches, especially when amounts are small. The IRS is likely to reduce such amounts during an audit.

Home office - no, and for more than one reason. If you have a room or a designated area regularly and exclusively used for business - then yes, you may have a prorated deduction, based on that room only, and you can deduct repainting this specific room. But can you claim with a straight face that you really need a designated office to manage the other side of the duplex? 

Your expectations sound good, but your complaints are unreasonable given the 3-week timeline you shared. I was under an impression you were talking about 3 months, not 3 weeks. Besides, as one my colleagues pointed out earlier, your return may not need any corrections even with the revised mortgage interest. Which is what your CPA stated, as well.

Maybe your tax return is correct as is, and he did not get around to explaining why it is correct. Maybe the return needs corrections, and he has not done them yet. Either way, his customer service is not spectacular, but neither is it as atrocious as you painted it.

"Patience is a bitter plant, but its fruit is sweet." (Chinese proverb)

For how long have you been trying to reach him? If he is a 1-man office, there could be many personal reasons. The guy could be down with Corona, for all we know. 

And FWIW, your tone and complaints about something that should have "taken him 5 minutes" would give a pause to many other tax professionals who could be interested to take you as a client.

These days, any professional can be easily checked online for reputation, unless it's someone brand new. Lack of a profile picture is not a good sign. 

@Evan Williams

RE Pro is only needed is you have losses from rentals that you cannot deduct due to high income limits.

The dynamics of taxation that I described remain the same, except your rental losses can be unlocked.

Let's go thru an example. 

Part 1 - Pass-through taxation

- March. You moved $10k from your personal account to your business account. No tax consequences.
- July. You bought $10k of widgets with this money and resold them for $15k. You created $5k of taxable income but not paying taxes yet.
- September. You bought $15k of widgets with the proceeds and resold them for $25k. You created $10k of additional taxable income but not paying taxes yet.
- October. You moved $20k out of your business account into your personal account and left $5k in your business account. No tax consequences.

Tax result: next April, when you do your personal taxes, you will add $15k of total business profit/income to your personal income and pay taxes on it.

Part 2 - Pass-through LLC v. Disregarded LLC.

You may be confusing the two. If you are the only owner, then the LLC is disregarded. It simply does not exist for the IRS and does not require any tax paperwork.

If you have partners or if you intentionally requested that your LLC be taxed as a corporation - then it becomes pass-through. It files its own tax return, but the taxes are still paid by you personally.

Either disregarded or pass-through, the taxation principle described in Part 1 is the same.

Part 3 - Using the money for real estate.

Once you pulled the profits out of your company account, you're free to use it for anything you want, without tax complications, because the taxes have already accrued.

So, you can use the $20k to buy a car, blow it in crypto or Vegas, or you can invest it in real estate.

Just remember that the taxes on your $15k taxable business profits have not been paid yet, so you better set some of this money aside for future taxes.

Maybe it's not too late to reconsider and stay in FL? :)

But if you're determined to freeze in the winter, then both @Nicholas Aiola and @Basit Siddiqi are excellent candidates.

Taxes that you pay in July 2021 for the second part of 2020 will be deductible in 2021. If you are allowed to prepay it in December 2020, you may be able to deduct them this year.

You need to explain your question, because there's no such thing as what you typed above