All Forum Posts by: Michael Plaks

@Account Closed

We spent more time debating this item than it is worth :)

@Account Closed

Purchasing something from a business account does not make it a deductible expense. Otherwise, I'd be buying cat food from my business account.

@Jake Hottenrott is technically correct, however the amounts are so small that it may not be worth splitting the hairs. If you deduct the full cost of TT under business, it won't be the crime of the century.

@Michael Biggiani

Reach out to @Eamonn McElroy who is in Atlanta, if you want a local guy. But these days, pretty much all of us real estate accountants work remotely and nationwide. If you're open to a remote relationship, you can choose from 20+ experts who contribute to this forum.

@Stanley Dean

This might be an overreaction. I raised 3 of them, I know. Just let him apologize and continue to live in the house. ;)

So, did you take his advice? :)

Happy New Year!

@Jason Graves

It's more complicated actually. You cannot have a $200k gain on a property with $700k cost segregation loss, so I assume you have multiple rental properties. Also, you do not have a "cost segregation loss." You have an overall loss after subtracting all deductions from income, and those deductions include depreciation amplified by cost segregation.

Let's assume that you have 3 properties. Prop A has a $150k loss, Prop B has a $250k loss, and Prop C has the rest of it, $308k loss. If you sell Prop B with a $200k gain, its entire $250k loss will normally be released. You will have an overflow $50k to offset your other income, such as your W2. Losses on Prop A and Prop C will stay suspended and roll forward. 

If you sell Prop A, its $150k loss will offset $150k of the gain. The remaining $50k of the gain will be offset with losses from Prop B and Prop C (using a complicated allocation formula) down to zero, but not below zero.

If these properties are all inside a separate pass-through entity that files its own tax return, like a partnership, things get more complicated still.

Here's a statement that will not sit well with @Yonah Weiss: if your cost segregation creates suspended losses, it may not make sense to do it at all. Need a holistic analysis of what benefits, if any, cost seg will create under these circumstances.

But wait - there is more! One thing that is likely not calculated correctly is the $200k gain. Most investors calculate it wrong. You have to understand the concepts of adjusted basis and depreciation recapture for the correct calculation. Your gain has nothing to do with the mortgage payoff, either. So your actual gain can be quite different from your $200k estimate.

Happy New Year!

The stupidest in the last decade? Hmm. I'd vote for the Tangible Property Regs. :)

@Account Closed

The 4 of you deposit $10,000 each into the LLC account. The LLC then transfers $40,000 into the personal account of the one who will be on the loan. Rinse and repeat.

It sounds simple, but there're other things that matter. For example, documenting partners' decision to use the business funds in this fashion and jointly accept the responsibility for the loan. An operating agreement protecting each other's interests. An insurance plan. Etc. 

@Jarvis Naylor

Second the recommendation of @John Woodrich

@John Teachout

Yes, Form 6252 for installment sales is included in TurboTax, and depreciation recapture is calculated, however possibly not in every version of TT.

Just because you did it for 40 years, does not mean you did it right and did not leave money on the table. But I will honor your request to not mention those evil CPAs here. Instead, I will link a song that you might enjoy (for free, of course):
https://www.youtube.com/watch?v=VLKFHZCoMAE