All Forum Posts by: Steven Hamilton II
Steven Hamilton II has started 25 posts and replied 5110 times.
Post: Unusual Tax Question Is this money for nothing? Is it Tax Free?
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
Originally posted by @Davido Davido:
@Steven Hamilton II, it would be helpful if you supplied some analysis or authority. Might encourage me to take a wiser position
.
Simply put I'm not willing to give my advice for free in this situation, nor would I want to engage myself in such transaction. You've received more than enough "free" advice here.
Two rules in life. Never tell everything you know.
Post: Unusual Tax Question Is this money for nothing? Is it Tax Free?
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
Originally posted by @Davido Davido:
@Steven M. At this point, I have not "received" any funds. What I have done is collected somebody else's rents and temporarily stored those funds that belong to the owner's of the real estate in accounts that I control. Since, I am not the owner of record on any of these parcels, the rent's that I have collected are not mine to spend. In the event that any or all of the owner's (or their heirs) appear and request the rents that I've collected, a court will compel me to disgorge the rents to the legal owner. That is why the rents are kept in accounts that are segregated (separate) from my own finances.
It is true that I have good reason to believe that the owner's have abandoned their property, but my belief does not establish the alleged abandonment of their real estate as a matter of law. Acquiring ownership of the rents or of the real estate requires waiting 10 years from my first possession of the property, then filing a lawsuit and receiving a judgement in my favor.
Six years or more, after collecting these rents, I will seek to invest the rents by loaning them to a company that I own. The loan will pay a reasonable interest rate into the segregated account being held for the owner of the property. The question becomes at what point, if ever, would the law require me to report the loan, or pay taxes on the rents borrowed, or limit my ability to borrow these rents that belong to the owners of the real property?
The answer that you and I agree completely on is that should I eventually gain ownership of these properties, I would then be required to pay tax on the net income from all the rents I've collected (including the interest income those rents earned), and if I later sold the real estate, at that point I would be required to pay tax on the gain.
However, what if I never seek to gain ownership of the real estate? I know of no law that compels me to do so. If I never seek ownership of these properties, I believe the rents that my company borrowers would remain loans, which are not taxed? Is there a law which specifies that I'd owe taxes on rents which the law does not recognize as mine?
I have been watching this intently and I have decided that I'm not even going to give a full comment as I have significant issues with this post on a great deal of levels. I find ethics to be utmost importance and I see some significant tax and legal issues.
Post: How to Update "Years of Experience" On The Forums
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
Originally posted by @Natalie Kolodij:
Does the algorithm not go back very far or when does it start appearing?
Right now my self and at least 5 other long term, very active tax pros have nothing there for our Top Subjects. We all have no less than 1500 posts 1k votes, ect
However there's a brand accountant with 15 posts and 7 votes who has his top subject listed as taxes and accounting.
I think the check mark is a little misleading too- on several websites a check mark is something you get when you're "verified" in some way- so a check mark next to top subjects seems like it's something you had to get approved, or prove you were an expert in.
I agree its very misleading and unnecessary.
Post: need tax strategiest / cpa
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
Originally posted by @Roger Hauf:
I am in need of a good tax strategist and or cpa my person will be retiring soon in the Denver Colorado Area, I also have some property in Texas.
I have a question regarding capital gain also, so we sold a couple of properties that I couldn't get 1031 exchanged in the time allowed.
Our LLC had losses which I thought would absorb the gain from the llc my current account said I have to claim the capital gain and not use the loss to offset or reduce it.
it that correct??? does any one know?
I agree with @Natalie Kolodij You should focus on finding someone you correspond well with as opposed to someone who is local.
There is a big difference in TYPE of gain and type of loss. Some will offset overall; however, it may not offset that specific type of gain/loss first. Focus on when that 1031 180 days were up as that can significantly effect your taxation on the gain.
Post: Schedule E Red Flags
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
Originally posted by @Account Closed:
The cost of the utilities is around 7800.
True True. the only reason I was worried was because I was audited on my personal side and the irs agent went overboard and I had to hire a lawyer to protect me for harassment because he was going overboard on the auditing. That’s why I am all paranoid now. Not a fun experience at all
Thanks for everyone’s answers!
Most people think its harrassment when in reality you should never represent yourself. There are tons of items they are legally required to ask. You do not have to answer each one of them. There are plenty of times where I don't provide something to the iRS because it may hurt my client worse.
Post: Schedule E Red Flags
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
Agreed, an amendment should not be an issue and this should have been caught in either his review or your review of the return. That said if he missed it he should amend at no cost. Amendments are not in and of itself a red flag. If you have the documentation for the expenses you should never be afraid of an exam.
Post: PMI Tax Expense / Deduction on Rental Property
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
Originally posted by @Natalie Kolodij:
@Daniel Hoffmann @John Underwood
This was an IRS error and was addressed in a recent reputable publication for tax pros:
Rental Property Mortgage Insurance—IRS Mistake
Online at the IRS frequently asked rental property questions, you will find the following incorrect question and answer:
- Question: Can you deduct private mortgage insurance (PMI) premiums on rental property? If so, which line item on Schedule E?
- Answer: No, you can’t claim a deduction for private mortgage insurance premiums.
This is wrong.
The cause for the error comes from IRS Publication 527, Residential Rental Property (Including Rental of Vacation Homes), where on page 1 in the “What’s New” section, the IRS states that the deduction for mortgage insurance premiums expired and you can’t claim that deduction for premiums after 2017 unless lawmakers extend the break.
The mistake that the IRS makes in its publication and FAQ is that the expiration of the mortgage insurance deduction applies to your qualified personal residence, not your rental property.
Natalie is 100% correct on that. It is still deductible.
Post: Elected to be S Corp and now don’t want it
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
Originally posted by @Ashish Acharya:
@Alicia Yoder, after the S election is revoked, the corporation becomes a “regular” or “Subchapter C” corporation. It does not become a disregarded entity.
If your LLC elected to be S-corp, when the revocation becomes effective, the LLC will be treated as a C corporation unless it files Form 8832 (Entity Classification Election) to be taxed as a partnership or disregarded entity. Note, however, that this likely results in a taxable liquidation of the corporation
Generally, you cannot reelect S status for at least five years following the revocation, although the IRS may approve an earlier reelection in certain circumstances. Such approval may be given, for example, if the corporation has new shareholders or if the corporation never enjoyed the benefits of
Even if they filed the 8832 they still have to process as a formal dissolution of the corporation.
Post: Elected to be S Corp and now don’t want it
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
Originally posted by @Daniel Hyman:
We hear about this kind of thing all the time. Individuals or even firms that advise s-corp elections where the tax savings don't justify the election.
You can actually write to the IRS requesting revocation of the S-corp and requesting to be taxed as a disregarded entity. The letter has to contain some specific info so you may want to check around the IRS website or work with a tax professional to walk you through it.
That is incorrect it becomes an S-corp. You have to go through the dissolution process. . Unless you properly file to disregard the original election timely. There is a very specific set of criteria to do this. If you do it incorrectly you will end up with a C-corp.
Post: Am I about to commit tax fraud...?
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
@Logan Reinard in which case if you are a GP then your entire GP share is subject to SE tax. I'm not sure if you were referring to you actually being paid by w-2; however, if you are. you should not be taking a W-2 wage from the entity itself. You definitely need a consultation with someone qualified. I can try to give you a referral if you'd like in OH. What is the largest city near you.