All Forum Posts by: Nicholas Aiola

@Sasang Doc I assume you mean if the Ohio property does fall through. There isn't enough information here to accurately calculate. You would need to know the adjusted basis of Property A, which will determine the total gain that could potentially be deferred. Of that gain, you would remove the amount of deferred gain from the acquisition of the first replacement property. What you are left with is the taxable gain, assuming the second replacement property falls through. The tax rate would likely be higher than 15% because you would have to factor in depreciation recapture (25%) and also possibly the net investment income tax (3.8%).

@Sumit Sehgal Incfile has a good resource on their website regarding ongoing state filing requirements, fees, etc. I believe Upcounsel and LLC University have similar state-by-state info on their sites. I would recommend checking those out and confirming your filing obligations on the specific states' websites to confirm.

@Tommy Hopkins If divorced, each spouse can only offset $250k of their share of the gain (not $500k each). However, I see you are located in TX, which is a community property state. If the couple lives in a community property state, the rules could be different regarding the initial spousal transfer. This is a specific scenario and, without further research, I do not know that answer - it would require a deeper look into Sec. 121 and community property state laws.

@Han T. If your business is a rental business, expenses before you acquire your first rental should be added to the basis of the first rental property. Business expenses are not deductible until you have a business, and you don't have a business until a rental is placed in service.

@Peter Morgan Your home state taxes everything, but most states will give you a credit for taxes paid to another state to ensure you don't pay state tax on the same income twice. So, if you pay CA tax, IA will give you a credit based on the amount paid to CA.

@Sasang Doc You could still benefit from REPS if your income is < $150k. What Amanda is referring to is the upper limit of the income range in which you are allowed to deduct rental losses against nonpassive income if you are not a REP. There is a special $25k loss allowance for rental real estate with active participation for those with income < $100k. The $25k loss allowance phases out once income exceeds $100k, until your income hits $150k, at which point no rental losses are deductible against nonpassive income…unless you are a REP. That's the significance of the $150k.

See Sec. 469(i) for more info.

@Joe Martella Well said!

1. There is nothing prohibiting your LLC from owning alternative assets or other investments. There would be no tax benefits of holding these investments in your LLC, since LLCs are tax neutral.

2. Unfortunately not. The sale and purchase would be two separate transactions. The pickup would likely not be a justifiable expense on the tax lien business, since the truck was not used for that business. It may be deductible on your rental business, but if the rental activity is passive, it will not offset the profit from the sale of the tax lien.

@James Sebastian Without researching, that is how I would approach it. Reg. Sec. 1.514(c)-1 might shed some more light on this.

@Alec Lundell Loan costs (including points) are amortized over the life of the loan. Take a look at Schedule E for a starting point re: common rental deductions. You could also Google "landlord chart of accounts" for some more detail.

@Pat L. Correct, that is Reg. Sec. 1.1038-1. Glad it helped!