All Forum Posts by: Michael Plaks

Thanks @Dmitriy Fomichenko

@Tim Hansen - yes, as my colleague @Nicholas Aiola said, send all questions to him. I'm too lazy for questions, unless they are posted here.  :)

And look what happened in merely 15 hours!  @Natalie Kolodij overtook you as the #1 contributor to the forum. I bet she had something to do with it. :)

@Dan Cournoyer

All of the expenses that you listed, including allocated tax prep fees, portion of the phone bill, travel etc. are equally deductible with or without a partnership LLC.

You cannot arbitrarily shift partnership income between husband and wife, no more than you can without an LLC.

Good thinking, but you do not gain any tax advantage, other than lower IRS audit profile.

Less than $600 for a tax return with investment properties in multiple states is an incredible bargain - provided he does a good job.  I would have his work checked by another professional and, if it is confirmed that you get quality work - treat your CPA to a real nice dinner.

@Jay Patadia is in Somerset, and @Simon Filip is in Paramus.

Remote - you can choose from the many fine tax experts who regularly contribute to this forum.

@Eric C.

Frankly, I have hard time believing that 2 of my peers from this forum would make material mistakes. Mostly out of professional curiosity, I would like to see what kind of mistakes they were.

Feel free to reach out privately if you want to share this information.

@David T.

@Logan Allec can be difficult to reach currently, and he may not be accepting new clients currently. The goal of reaching him is to get referrals in his area.

@David Roberts

What @Ashish Acharya said is of course correct, but is also highly complicated.

Considering that the entire deal started and ended (for you, I mean) within 2018, and no partnership returns have been filed, you may consider cutting corners and treating the deal as 100% your partner's for tax purposes, especially since the eventual sale will be reported under his SSN.

On your end, you will report the difference between the total payout you received from him and your total investment as your taxable income. It could be business income (Sch C) or short-term capital gain (Form 4797), depending on your involvement and your other business activities. The difference between the two treatments is whether or not you pay the 15% self-employment tax on your profit.

Still, I side with Ashish in recommending professional help, as my suggestion needs a more detailed discussion before implementing, with a few pitfalls to address. 

Ideally, it also needs to be coordinated with how your partner is going to treat the deal - sending you a 1099 etc.

@Matt Ward

@Matt Ward, @Natalie Kolodij, @Nicholas Aiola

It will be interesting to see if the revised Sch E accommodates 199A by including a checkbox. I bet not.

@Dan Trinh

Technically, you DO own a business, from the tax law perspective. There is no requirement to formally create a business entity. The only requirement is to conduct business activities, which you do.

As mentioned by @Ashish Acharya, there're no tax benefits from creating an LLC. You can deduct all business expenses, including your travel to NV, with or without an LLC.

Creating an LLC may provide you with legal protection, which is completely separate from taxes and should be discussed with an attorney.