All Forum Posts by: Nicholas Aiola

@George Habator If it is not a recharacterization, you cannot roll over/convert a Roth IRA to a Traditional IRA. To move funds from one to the other would be considered a distribution from the Roth IRA and a direct contribution to the Traditional IRA, which would be limited to the annual contribution limits.

@Pier Di Giorgio Check out Reg. Sec. 1.469-1(e)(3)(iii). That should help you with the calculations for "average period of customer use" to determine how long you have to rent each side, and to how many people, to determine the classification of the activity for tax purposes (passive vs. nonpassive).

@Michael Medaglia Good question. The first item to address is that a PLR for another taxpayer cannot be relied on as precedent by you. The second item to address is whether or not your particular situation is "unforeseen", as per Sec. 121 and related Regs.

This would depend on your specific facts and circumstances regarding family planning, size and use of the house, attempts to modify the use of the home to accommodate your new situation, etc. Renting the same home for a few months after the sale is an interesting detail.

I would not be able to present any level of confidence without a deeper analysis, but you are on the right track with your research.

@Jose Fernandez

1) Keep meticulous books. It is so easy for tax deductions to slip through the cracks without proper bookkeeping.

2) Along the lines of #1, bad bookkeeping. Also, miscalculating basis/depreciation and misclassifying repairs vs. improvements.

3) Taxes. That's why they hire us ;)

4) An app that automates everything for you. MileIQ is a good one.

5) If you are good at bookkeeping, use accounting software and reconcile your accounts. If you are not good at bookkeeping, hire it out. This is the most impactful way to make a CPA's life easier during tax season.

6) Each CPA firm is different. You will find that most tax professionals on BP have unconventional pricing methods.

7) How much value they can bring to you, and how they mesh with you and your business. A good CPA is costly but will pay for themselves over time with proper advice.

@Jeff Huff I would defer to a cross-border tax specialist on this one, but I do know that Canada does not take kindly to US LLCs, which could cause double taxation issues for you. 

@Sam Dalton No, that would not change anything. You still meet the ownership and use tests under Sec. 121.

@Justin Brown There are several variables at play here. Too many for me to address in depth on this forum, and admittedly, kennel and dog breeding businesses are outside my area of expertise. In relation to the real estate items, potential issues that may complicate your situation is the determination of the rental activity in terms of passive vs. passive with active participation vs. nonpassive, as well as renting to related parties at less than fair market rent.

@Jake Paul If your brother is an owner, he will have reportable income equal to his share of ownership. You could explore gifting ownership, but you should discuss that with a tax professional who is familiar with your and your brother's tax situations.

@Sam Dalton Since you lived in it for at least 2 out of the last 5 years, you can exclude up to $250k of the gain ($500k if you're married filing jointly). The exclusion does not apply to depreciation recapture.

@Erica NA Yes, you would be able to trace the interest to Schedule E since you are married and will be (I assume) filing jointly.