All Forum Posts by: Nicholas Aiola

@Tristan Cai You do not have the ability to exclude legitimate deductions from your tax return. Not only would that be tax fraud, it would be mortgage fraud in this case, as well.

Make sure your lender is adding back the proper tax deductions before calculating DTI, such as depreciation, amortization, mileage, etc.

There are strategies to move income off your personal return, but an analysis would need to be done to determine cost vs. benefit, and the proper actions to take.

Thanks @Victoria S. !
I love this question. I can't speak for other CPA firms, so I'll answer for myself. Tax prep, accounting/bookkeeping, and financial reporting services are fairly straightforward - the more time consuming and complex the situation, the higher the fee. This makes sense as the higher fees are charged to those who require more time and expertise.
Tax advisory services, however, are a bit more complicated. This is where most investors struggle with the John Deere/machete decision making process.
At our firm, we design our advisory services with this exact thought in mind. We offer tiered services that accommodate beginners all the way up to advanced and seasoned investors. The main difference between each tier is how much access you have to us, and how much of our time and services are available to you. This allows investors at any stage of their investing journey to access a team of professionals who specialize in real estate, regardless of portfolio size.
Of course, we have recommendations as to which tier is the best fit for a given investor, but ultimately the decision is yours - you have to be comfortable with the timeline and budget of when it is right to bring on a CPA.

@Account Closed I'm not sure I know what you mean by treated like earned income, but net rental income is taxed at your ordinary income rates whether it's a short or long term rental. Also, there are rules with STRs that can change the tax implications, such as the average length of stay of your guests (less than 7 days = nonpassive activity) and whether or not you provide "substantial services" (doing so would convert it to a self-employment activity). Further, there are separate rules if you occupy the property personally, whether at the same time as your guests or at separate points throughout the year.

@Justin Gottuso That's a loaded question, since NPOs have specific rules and standards. The short answer is that NPOs are allowed to pay their board members a salary, but I would consult an attorney and tax professional who specialize in this arena to make sure everything is done above board.

@Stephen Brown 🤐

@Kerns Churchill A computer would be eligible for bonus depreciation if capitalized. I've also seen computer expenses listed as a separate line item in Other Expenses. Microsoft Office would likely fall into a Dues & Subscriptions expense account or some type of software expense account.

@Kerns Churchill I've seen it deducted in a few different places - for example, insurance, administrative, as a separate line item in other expenses, included in basis, etc.

@David Benton Not sure what software you are using, but there should be a Fixed Asset section/module in the tax filing software that will allow you to enter each asset with its own in-service date, basis, and depreciable life. Bonus depreciation may or may not be automatically applied, depending on the software. Suspended losses will be reported on Form 8582. Any Unrecaptured Sec. 1250 Gain left over after applying suspended passive losses (if any in 5 years) maxes out at a 25% federal tax rate.

@Francisco Rosas A 1041 may not be required depending on the type and details of the trust. A 706 filing is not required to claim the step up in basis. Get an appraisal as substantiation of the FMV in the proximity of the date of death - you don't need to file a 706.

@Cliff T. Your Box 1 profits are taxable regardless of the distributions. Box 12 is other deductions; Box 16 includes distributions - this does not affect your taxable income.