All Forum Posts by: Dan Schwartz

Thanks and congratulations, @Steve Vaughan!

@Joseph Schommer have you talked to banks about loans that can help expand your core business?  The way you've talked about it sounds like you may have written yourself off without their input/feedback.  How big of an expansion can your market support?  What capital do you need to pull it off?  Your 10-year track record of success should be an asset in this endeavor.  It means you know how to pull money out of this particular market.  

@Adriana Vergara you have to find out what that means in the property’s jurisdiction.  Ask a title company near there.  Out here we might call that a Special Warranty Deed.  

Many people on BP talk about using Quitclaim Deeds when they can actually use Warranty Deeds and better protect the chain of title.  It’s possible that the seller is specifying this because they don’t know any better. 

Find out from a local title agent what this means and what the best/normal deed is.  Then ask why the seller can’t provide that best/normal deed.  

@Donald F. there are many high-quality CPAs here on BP and - guess what - they don't always all agree on strategies!  They have, however, shown a firm foundation in what is and isn't part of the tax code.

I'm not a CPA, but I wonder from your post if you can really defer the $300K by converting it to equity in the deal.  Was the income earned?  Do you have constructive use of it in order to roll it into the deal?  Or have you (or more likely, your brokerage) organized a structure or mechanism by which the compensation can be deferred for tax purposes?

As for bonus depreciation: you can't take bonus depreciation on the property structure itself, which is usually the largest element of the purchase cost.  You probably know that you can't take any depreciation on the land.  If you did a cost-segregation study, you could bonus depreciate the various components of the property like the fixtures and some improvements, etc.  I've never done, nor felt it was economical to do, such a study on my properties, so I don't know how much bonus depreciation this could generate.

I haven’t seen this proposal, but the headline number suggests that it’s harmonizing with the Section 121 exclusion on personal property.  That could be a fair compromise between the current unlimited availability of tax deferment (including the possibility to complete avoidance via step up basis upon death)*, and eliminating it entirely (as the Trump tax cuts did to exchanges of al non-real estate property).  

*which, to be clear, I currently enjoy and have plans to enjoy for decades to come 

@Matthew Crivelli that sucks.  Sorry.

@Matthew Crivelli how long were your clients waiting on countersigned contracts?

@Chris Little it's difficult - but not impossible - to prove that you were "in business" until you have revenue.  @Michael Plaks has pointed out the audit risk of doing so.  (Similarly, you should know, you generally have to capitalize expenses related to a investment property until it is placed "in service," but that's a separate discussion.)   In my own experience, we had one business in which we had to defer start up costs to the next tax year, but were able to write it all off at once, as it was below the $5K threshold; we had another where we had to defer to the next tax year, and are amortizing the excess costs over 15 years; another where the business started early enough in the year to include them in the same tax year; and yet another where the start-up costs are still in suspense because we haven't pressed "go" yet.  Every situation is different.

You'll eventually be able to deduct all "ordinary and necessary business expenses" which would include the licensing course, etc., but doing so before you have revenue (or even contracts for revenue) is at your own risk.

If CPAs you've contacted are too busy right now (for good reason!) you might file an extension for 2020, make sure that you've paid (or even overpaid) your 2020 taxes, and then start working with a CPA soon after May 17.  You will be penalized for not paying your taxes by May 17, though you can extend the filing until October 15.  Since everything you seem to have questions about involved deductions (not income), you should be able to calculate your maximum tax bill based on the rest of your 2020 situation.  If, after sorting out these details, you file by October 15 and owe less than you guessed, you'll receive a refund.

P.S. You might even consider the CPAs that have been responding here on this thread (and elsewhere).  Your CPA does not need to be local to be effective.

P.P.S. You can easily file an extension on the IRS website by making a payment of any amount.  That will give you the chance to interview CPAs when they become available, rather than hitching blindly to the one you convince to file your extension.  If I don't think I will owe more taxes, I pay $25.  If I think I do owe taxes, then I pay what I think I'll owe.  You have to do this by the deadline (May 17 this year) and you will be extended to October 15.  Check your state's rules on extensions as well.  In Arizona, I don't have to file an extension with the state; I just check a box on my tax form that says I filed an extension with the IRS and that's why my AZ return is coming in late.

Now now, let's be honest...there is NO greater, um, "light bulb installing" contest (I was going to use a far more vulgar descriptor, but it's BP) that a group of engineers debating the "correct" method of absolutely anything in life.  CPAs don't even begin to come close.

@Kevin Taylor Talk to a number of graduates of the program, see what they are doing post-graduation, and decide whether you want a similar path.  I highly doubt you will find many many graduates of such programs here on BP, which makes the forum a less-valuable resource for assessing the opportunity.  Good luck!