All Forum Posts by: Nicholas Aiola

@Jason Pryce The property should have been reported on your taxes as a rental since 2012 at, I assume, 50% business use. You would convert it to 100% business use as of the day you moved out. This would affect your depreciable basis and all prorated expenses.

@Josie W. I will start off by saying that if your investible cash is within an SDIRA, don't pass up a good investment. But if you have investible cash both inside and outside of an SDIRA, I recommend investing in buy and hold rentals outside of SDIRAs instead for 4 main reasons:

1. If you use leverage, you may be subject to UBIT - research UDFI for more info about this.

2. You lose the benefit of depreciation, which is a major tax advantage of rental real estate.

3. If you sell a long-term rental within an SDIRA, you pay no tax upon the sale, but retirement withdrawals are taxed as ordinary income, meaning you lose the benefit of long-term capital gains rates.

4. Buy and hold real estate could cause liquidity issues in retirement. When you have to start taking RMDs, you could be forced to sell or take on debt.

@Jerry W. Converting the entity or distributing the property will be a taxable event and will result in a large tax bill for you. Although very complex, look into F reorganizations as a potential lifeline.

@Kelly Jensen I always recommend filing state tax returns, even if there are only losses for the year, to establish presence in the state and track losses from year to year, which may help in the year of exit.

@Eddie L.

1. The FL LLC is disregarded, so for tax purposes, is it as if the WY LLC owns the property directly. I would say rental real estate, but you may feel differently.

2. $0 in Year 1. $5k in Year 2 as organizational costs and the remaining $1k will be amortized over 15 years.

3. $5k in Year 1 as organizational costs and the remaining $1k will be amortized over 15 years.

PS - Unless there is something else involved (layered entities, trusts, etc.), $3k per LLC is extravagant. I am sure you could find an attorney to form an LLC for you for less than $1k, including state filing fees, which are typically only a few hundred dollars. Alternatively, you can DIY the LLC formation for less than $500 per LLC in most cases.

@Charles Worth Each CPA may have a different response, I am sure, but a composite return removes the requirement to file a state tax return for that activity. There will still be a K-1. Investing in a C Corp or REIT does not produce a K-1 and may have simpler reporting requirements at the individual level. As usual with tax stuff, it depends.

@Deanna Wallace That's odd - so sorry about that. I will check with the team and get to the bottom of it. I'll follow up with you directly via email.

@Jon Fletcher I'll respond directly to your PM.

@Gene Liang An LLC won't change your tax situation. A corporation (C or S) most likely will affect your ultimate tax liability, but maybe not positively. There is no default answer here, since entity structuring is situational, especially when there are unmarried partners. For example, your W-2 salary exceeding the SS wage base makes the SE tax less impactful for you, but that may not be true for your partner. You'll need tailored advice from a professional who can dig into your specific details.

@Linda Nek It's possible you may be able to exclude a portion of the gain under Sec. 121. Check out Reg. Sec. 1.21-3(c) for the details regarding partial exclusion due to change in employment. Keep in mind, none of the recaptured depreciation is excludable under Sec. 121.