All Forum Posts by: Steven Hamilton II
Steven Hamilton II has started 25 posts and replied 5110 times.
Post: Two Flips Do I File Cap Gains Or Sch C?
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
Natalie and Plaks covered this.
Its self employment income not capital gain. Those who are not qualified should not be relied upon.
I'm not very fond of S-Corps being used for everything. A great deal of analysis needs to be done before choosing an entity.
Post: Thoughts about the virtual CPA firm The Real Estate CPA?
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
A great deal of accountants work with out of state clients. You can find an array of them that specialize in real estate here. Being that I am an accountant I cannot advise towards or against any firm other than I will say to make sure you do your due diligence on any firm you hire. Make sure you ask them good questions, make sure they carry insurance and that they are available year round.
Here is a list of due diligence questions.
https://www.biggerpockets.com/forums/51/topics/704...
Post: Correcting Tax Returns
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
Originally posted by @Michael Plaks:
I had many experiences similar to that mentioned above when we "inherit" a client from another accountant. In most cases, these are accountants not specializing in real estate, though.
Can't speak for others, but I personally would appreciate if a colleague of mine ever catches an error in the work of my firm and brings it to my attention. As @Linda Weygant said, nobody is infallible. I hope I'm close, though :)
Some of the red flags? OMG, a long list, @Joshua Thompson.
- Schedules C with zero income and large expenses, particularly interest, taxes, and repairs
- Flips reported at gross profit instead of full selling price minus cost of goods sold
- Flips reported as short-term capital transactions on Schedule D
- Schedules E with zero income and large expenses
- Schedules E with repairs several times higher than the rent
- Missing depreciation
- Losses from rental properties or K1s not showing up on 1040 (not always a mistake, but often is)
- All expenses grouped into some $40,000 "miscellaneous business expenses"
- Missing deduction for use of a business vehicle
there are another 20-30 very common errors and oversights, soon to include the missing 20% QBI deduction.
That primarily covers it.
Post: Correcting Tax Returns
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
@Ashish Acharya,
It has been addressed with them and it crossed multiple years. I am not mentioning names here as I do not believe in that kind of Karma. We all make mistakes; however, I have seen these same mistakes from these preparers in the past. Alos there is an issue called 7216 in which I cannot discuss that client with another preparer except in concept.
Post: Correcting Tax Returns
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
Originally posted by @Natalie Kolodij:
FYI it wasn't my work Steven corrected.
He would have called me to yell at me for bad work lol
It was not your work.
Post: Correcting Tax Returns
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
I just spent several hours today correcting a few very incorrect tax returns prepared by CPAs who advertise their services here. In one cases this is going to cost the client a substantial amount of money. In the other case it left a great deal on the table.
Make sure your Tax Accountant doesn't outsource their tax preparation work. Also make sure they have Errors and Omissions insurance.
If they have the time to spend on BP answering a lot of questions this time of year I'd have some concerns.
Post: Help with Tax form 1120S
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
Originally posted by @Jesus R.:
Hi @Natalie Kolodij, I appreciate your immediate response.
Why am I NOT surprised about your TurboTax comment? :)
Turbo Tax is a great program. It calculates things perfectly. I get a great deal of Audit Representation work from it. However, the information is only as good as the tax knowledge of the person preparing the return.
It sounds like you do not have correct financial statements which means bookkeeping needs to be done appropriately.
Keep in mind if you and your business partner took different amounts out of the corporation you have invalidated your election to be taxed as an S-corp and will be considered as a C-corporation.
In business you do not want to be penny wise and pound foolish.
Post: Capital gains tax on home owned less than 2 years.
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
There is one other question. Why did you sell it?
Here is a link that should help you:
Post: tenants wants to pay a couple months in advance?
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
A whole lot of people providing accounting advice when they are not qualified.
Most taxpayers are cash basis. That means when you collect it then it is considered income for tax purposes.
For accounting under GAAP (which isn't a factor in this situation) it would be a liability for the amount of "unearned" rent for future months. You have issues in the event of an eviction or other issue where you may have to return a portion. I would consider a clause or memorandum detailing that if it is paid upront it is considered paid in and nonrefundable except in VERY specific circumstances.
Post: Claiming Depreciation for the past 5 Years of ownership.
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
Originally posted by @Michael Plaks:
The tax accountants on this forum are all real estate experts. We work remotely and nationwide. I have never met half of my clients in person, maybe more than half. With today's technology, it's easy: emails, secure portals, video conferencing, etc.
But it is your business and your decision. Contact some of the accountants you like and see how you feel about it.
Well... Not all of them. Some do post incorrect information. But I won't mention names.