All Forum Posts by: Michael Plaks

Thank you for the compliment.

So your renters insurance is for the place where you live yourself - then it is NOT deductible, even though it was required as a condition for selling you the umbrella liability insurance. Do you agree, @Lance Lvovsky?

@Ginger P.

Good question, but there won't be a simple answer. Rather, it invites an extended discussion of various possible interpretations. 

The IRS position will most likely be this: you bought it for $100k and depreciated it down to $90k - which is your adjusted basis. Now you demo-ed it for $15k, so your new basis is $105k. You spend another $150k to build a new house, raising your investment to $255k. You sell for $300k, and your $45k profit is taxed as ordinary business income, plus self-employment tax.

As you can see, it is the worst possible result for you, which is why the IRS would go there. :)

I can see room for some creative tax planning here, but it would not fit in a short online post.

Someone please give @Joseph Lucas Jr some kind of BiggerPockets award for opening the biggest can of worms of 2018.

Now, if anything is clear from this debate to a casual observer, then it goes like this:

1. Even attorneys will never agree on asset protection. Much less the rest of us, mere mortals.

2. Keep it simple.

3. Don't use TX Series LLC outside of TX - unless you want to be engulfed in heated debates like this one.

4. A heated debate is a reliable sign that the solution in question is not reliable.

@Jefferson Smith - 

both people who responded, @Brian Eastman and @Carl Fischer provide the services you're looking for and have solid reputation. Add @Dmitriy Fomichenko, and you have my top 3.

For discussions like this, we really need the LOL icon, like they have on Facebook.

Notice my outfit on the profile picture. This is how you beat Uncle Sam. :)

@Brandon H.

"many people like to twist things to their own benefit" - that would include myself :)

@Brian Bradley

Once again, and the last time, I'm not relying on anything. I'm asking attorneys for their professional opinion. You have one, other attorneys have theirs. I'm learning from all.

@Brian Bradley

I have no problem with Series LLC, particularly Texas Series LLCs in my state. My clients use them. You don't need to convince me of their benefits, as I'm not against them. The cost saving factor is important, and it is the primary reason I support them.

@Joseph Lucas Jr, the original poster, was considering forming a Texas Series LLC and using it for his AZ business. I thought it might not work as intended (and still think so). But I'm an accountant, not an attorney. So I asked a legal question, hoping that attorneys like yourself would clarify it. Regrettably, you continue with personal attacks.

If I understood your position - you're saying that AZ or any other state would simply honor the statute of the state where the Series LLC was formed, Texas in this case. I doubt so. Apparently, I'm not alone in my doubts, as these lawyers specifically said:
"1) Choice of Law. If a series LLC is sued by a third party in a state that does not authorize the formation of series LLCs, then it is possible that the law of that state would be applied. If that state does not respect the liability shield of the series LLC structure, the lawsuit could potentially put the assets of all series and the master LLC at risk. " http://huckbouma.com/blog-149-Series+LLCs%3A+Could...

You're also recommending creating FLPs, DSTs etc. These vehicles certainly have a place in asset protection, estate planning and tax planning. However, they're complex and expensive and need to be justified. I believe you and I agree that cost is an important factor. So, recommending them should probably come with a disclaimer of when it is and when it is not justified. 

I'm OK with grey areas. In fact, I recommend to my clients that they take advantage of the grey areas. You mentioned risks. The risk of taking a grey deduction is maybe having to return it to the IRS. The risk of not taking it is forfeiting your hard-earned money.

Where I have a problem is the black areas, as in reckless advice to deduct your groceries, deduct your clothes, deduct your vacations etc. 

PS. Of course, I'm all for hiring a professional, like you suggested. I have bills to pay. :)