All Forum Posts by: Paul Allen

Above $150K all passive losses (such as rental losses) are suspended. When the losses are suspended you cannot take them this year, but keep track of them! You can take them in the future if you have more rental income (or other passive income), lower combined MAGI, or in the year that you sell the property.

Cash Basis. 

I may transition my financial planning business to accrual at some point because I have many accounts receivable and it would be easier to use accrual method for taxes than the artificial entries I make every year to close my books and then re-open them.

Just curious - how does this money qualify as 'extra'? Why didn't it just go into the mutual funds with the other money? 

I'm not suggesting it should be in the mutual funds, just trying to understand the thought process that went on when you were investing, stopped with $50K left and said "that money that's left is extra". Understanding that might help determine what to do with the money.

Partnerships are not directly taxed, but are required to file form 1065 to report the distributive share of partnership income and expenses.

Translation: You add hundreds (maybe thousands) to your cost of tax preparation, and you don't receive any additional tax benefits. 

The lawyers can address the legal benefits of spouses forming a multi-member LLC.

EAs are more extroverted. If you're on an elevator full of CPAs and EAs, the EAs will be the ones looking down at someone else's shoes.

If he was paid wages, but didn't get a W2, would he not report the income?  I would have 'not received' my W2s every year if that's how it worked!  :-)

If he has legitimate deductions he should claim them whether he has received a 1098 or not. As @Logan Allec pointed out, there are other ways to determine the deductible amounts paid. 

You're setting up two LLCs, one for rentals and one for flipping. The one you are going to use for flipping you will elect to have taxed as an S-Corp. 

Electing S-Corp taxation for the flipping business would be done to improve your tax situation. Electing S-Corp taxation is not a move to make to change liability exposure. The LLC covers that part.

The question is when does it make the most sense to elect S-Corp taxation for the flipping LLC? (The smart guys above are covering that topic nicely! )

Best of Luck with Your Real Estate Investing!

The Little Book of Common Sense Investing by John Bogle.

@Dionne Michelle placing rental properties in an S-Corp negates some of the tax advantages of rental properties. You may have set yourself up to pay a higher tax bill.

I recommend you get a tax professional who specializes in real estate to assist you in sorting this out. It will be money well spent.

Best of Luck with Your Real Estate Investing!

@Rick S. is there some reason you can't give her $10K for your half of the closing costs to keep it simple?