All Forum Posts by: Michael Plaks

@Jonathan Fraundor

To clarify what has already been stated here:

When you sell, you will owe taxes on "depreciation recapture" - whether or NOT you actually took it. (In the IRS language, they tax you on depreciation "allowed or allowABLE").

If you choose to not take depreciation, not only it's against the tax rules ("impermissible accounting method"), but you're shooting yourself in the foot. It's like refusing to borrow $100 from me, but still having to return it to me later, whether or not you took it. 

Take it.

@Eamonn McElroy and @Michael Jackson

There is no need for Nancy v. Donald on BiggerPockets, we're not politicians here.

I happened to be of the opinion that interest earned by professional private lenders or hard money lenders is ordinary income for their lending businesses (as in "in the business of lending money"), as distinct from portfolio income on passive investments and casual loans.

Eamonn - please correct me if I'm wrong and explain how would you classify the income and expenses of a HM lender, let's say operating as a partnership. 

@Eamonn McElroy

@Eamonn McElroy is technically correct. 

Whether you want to be technically correct on relatively small items that are immaterial for your overall tax situation is your decision. In my 20+ years of experience in defending clients audited by the IRS, the IRS has never questioned 100% business use of computers. One time they objected to 100% cell phone use. 

I'm NOT suggesting that you should ignore the tax rules. I'm suggesting that some decisions are not worth deliberations, one way or another. A $500 computer may result in a $100 tax savings. Claiming it as being used 50% v. 75% is a $25 decision.

Interesting, but misleading in several areas. I hope to find time later to explain why it is misleading.

Stop giving away these strategies, Bill! I charge $49,995 for a weekend boot camp in Moscow, where I teach my students how to deduct the cost of the training, family and pets included. You're spoiling my gig!

(JK, if this was not obvious)

@Keivyn Reyes

Reach out to @Nicholas Aiola and @Basit Siddiqi

So if your own 15 properties, you carry 15 credit cards? And while at Home Depot, charge your shopping to 3 different cards? Standing at the checkout, carefully choosing the right card?

We are never too busy for a non-paid banter.

It's dealing with demanding clients that does not sound too appealing. ;)

@Bruce Gardner

A lot depends on the practice your CPA is running. Many tax firms focus on volume tax preparation, and it does make their tax seasons overloaded to the point of not having extra 15 minutes to spare. You're thinking "but you could've made an easy $350 by helping me" while he is thinking "I was risking to miss the deadline for 15 clients already, and I couldn't afford to lose them." Other firms plan their workload for the year to avoid overload and leave room to handle ad hoc projects. 

The other factor is the type of engagement you have. If you only hired your CPA for tax preparation, he would not be expecting those extra projects and leaving room to fit them in. If your engagement is for a year-round advisory, then he should be expecting your periodic need for his time and plan accordingly.

Since you mentioned that his firm was specializing in tax planning, and you have discussed your needs, it seems like your requests should not have been unexpected for your CPA. If so, then they are probably not well suited for what your need. And I doubt that engaging multiple tax firms is productive, other than maybe for a special one-time project.

Your understanding is correct, but there is no 1031 involved. QOZ is an alternative to 1031.