All Forum Posts by: Steven Hamilton II
Steven Hamilton II has started 25 posts and replied 5110 times.
Post: Finally hit 5k Posts
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
1.6 posts per day since I joined in 2011. I love helping everyone with their tax issues. This group has made a huge difference for my investing and my tax practice. Thank you to BP!
Post: Which is better for an LLC a S Corp or C Corp?
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
Originally posted by @Cynthia Harrison:
@Eamonn McElroy Thank you Eamonn.
I am starting with wholesaling and want to expand to flipping then to rentals (long term holds). Not to concerned with sons yet as it will be awhile before they join in. At the moment I'm on disability and have a very small retirement income. I'm sick and tired of living month to month and need to change things A LOT!
Does this info help? Also I'm meeting with a lawyer this week to set LLC up but after being "let down" by two divorce lawyers I'd like to have some idea going in
Thank you!
Most of the above is correct. I will disagree on some points but it depends upon the exact situation. For some clients they have been far better off with a C-corp as we've been able to structure their tax rate to remain at 21% even plus the benefit of certain fringe benefits.
What it looks like is some flipping and wholesaling income. I would strongly advise you to consider discussing this with someone qualified. The second question is why you haven't consulted with an accountant specifically to get information that pertains entirely to your situation. There may be opportunities you're missing out on that haven't been discussed here.
Assuming you can have someone else fund the business if there are start up costs you should consider looking at a Special Needs Trust.
Feel free to reach out if you have questions here.
Post: Accounting for Multiple LLCs
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
You will want to utilize the class function in Quickbooks to track them appropriately. You can do this on the desktop version or online. In Xero it is Tracking Categories that you want to use.
Post: Tax implications of possible change from Schedule E to C
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
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Rental Properties do not belong on Schedule C. They are passive. Even if you filed a partnership return they would go on Form 8825 as rental income/loss and would carry to your personal return as such. You can list the property as joint property; however, when filing a joint return it belongs to both of you automatically.
Post: Bonus Depreciation Items
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
Originally posted by @Eamonn McElroy:
"Different accountants I've talked to have different items they believe can be accelerated."
You should speak to a higher caliber of "accountants." Perhaps tax CPAs and EAs and not bookkeepers/generalist accountants. It's not that complicated. Especially bonus depreciation related to residential rental real estate.
I suspect that if you're reviewing your "2018" books, merely "talked" to accountants you don't seem to have engagements with, and are now asking about bonus depreciation here on September 3, 2019, you're probably going to use and rely on the advice provided in this thread to DIY your extended tax return. I hope I'm wrong...
That's the stuff amended tax returns are made of.
Well said.
Post: IRA loan for SFR investment deal.
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
Originally posted by @Josh Longtin:
My wife and I have found the deal we have been waiting patiently for. Ultimately, we would like to use her IRA to fund the deal (flip). Has anyone had experience doing this? I am not familiar with the legality and tax position we would be in. (We are in MA)
How would this be different than fundraising with a private investors IRA?
Thanks in advance.
You cannot borrow from your IRA. You can borrow from a 401k.
That said you can do an indirect rollover for which you have to refund an account within 60 days. That is typically not enough time for most investors.
Post: Tax categories on a vacation home expenses
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
Originally posted by @Pandu Chimata:
Thank you for your insight. I will approach my tax guy, eventually to file taxes.
Good to know that all expenses before the setup is considered as capital.
It is interesting to know that level of services and length of stay also make a difference. The average length of stay would be 3 days. No specific services other than home is fully furnished and equipped with all kitchen utensils to cook, etc.
You should also approach them NOW to begin tax planning for the year so you don't have surprises. You also want to make sure you will have your documentation in the order he will need it in. He may have suggestions for you based upon your specific situation.
Post: Solo 401K vs. Self Directed IRA
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
Originally posted by @Danielle Wolter:
@Carl Fischer What is the benefit to doing them both? I have a Roth IRA set up as well that I've been contributing to (backdoor contributions) for a few years.
The benefit is you can contribute to both accounts and maximize your retirement savings overall.
Post: Do I have to pay myself an hourly rate to be a RE Professional?
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
Originally posted by @Clint LeClair:
Hello Everyone! Like a good number of you fellow investors, my spouse has a W2 and I am building up our portfolio by BRRR'ing. Between finding the properties, buying, fixing up, and renting out- I'm sure I'm easily going to hit the 750 hour cutoff to be a pro according to the IRS. But here's where I need your advice: do I need to pay myself for those hours? That would add a level of complexity on top of filing for the LLC's that I wasn't anticipating (payroll tax, etc.)
So, do I need to pay myself? Or can I just count the cashflow as income?
Thank You In Advance!
Clint LeClair
Hi Clint,
As @Natalie Kolodij you do not have to pay yourself a wage. The net cash flow is your income at year end.
Post: Solo 401K vs. Self Directed IRA
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
Solo 401k. End of story. That simple. The only big difference is there is no UBIT on real estate transactions. You can even do in service rollovers to a Roth 401k plan.