All Forum Posts by: Steven Hamilton II
Steven Hamilton II has started 25 posts and replied 5110 times.
Post: Claiming Depreciation for the past 5 Years of ownership.
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
- Votes 2,325
Originally posted by @Vern Schmidt:
Quite right, you have to balance how much it costs with how much extra depreciation you missed and what your goal is tax wise, does no good to take extra depreciation if you will be hit with passive loss limitation limit of $25,000. Generally about $1,000 to file 3115 but you really need to state total value of properties to make sure it makes sense.
Actually that is entirely incorrect. The losses carry forward and upon the time of selling or there is a net profit to use the carryover against it is beneficial as the rate at which it is recaptured is typically much lower than you are paying. This creates a spread that can be extremely tax advantaged as the Losses carried over (Passive Activity Loss or PAL) can offset ordinary income such as wages.
Anyone who doesn't correct their depreciation is asking for trouble.
Post: didnt take a wage from my s-corp
- Accountant, Enrolled Agent
- Grayslake, IL
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You really should be paying yourself using a payroll system if you're working and earning income. If you have employees etc you should be paid for your time just the same as them. You wear two hats one as an employee and the other as an owner.
Post: Questions for the CPA's
- Accountant, Enrolled Agent
- Grayslake, IL
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Originally posted by @Derek Tellier:
@Eamonn McElroy & @Steven Hamilton II
My apologies as of course you’re both correct.
I guess for some reason I thought there would be a simple cookie cutter answer to this situation but of course nothing is simple when it comes to taxes.
Thanks to both of you for responding. I do appreciate your direction.
I'd be happy to hop on a call and answer questions on his exact situation with you. Just let me know.
Post: Family law/real estate problems
- Accountant, Enrolled Agent
- Grayslake, IL
- Posts 5,272
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@Jerry W. any suggestions?
Post: How would this be taxed?
- Accountant, Enrolled Agent
- Grayslake, IL
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You would have to recapture the depreciation taxed on the part below 131k. You must do this EVEN IF YOU DID NOT take depreciation. There are procedures for correcting it to get the missed depreciation in that year.
You would have capital gains on the amount over 131k.
So yes, you'd have a tax bill unless you have a ton of capital losses hanging around that may offset it.
Post: Restructuring my business, any ideas
- Accountant, Enrolled Agent
- Grayslake, IL
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Be VERY VERY careful how that holding company is set up. You can cause major tax consequences if you do not proceed properly this is where I recommend paying for competent advice and getting more than one opinion.
Post: Is a Non-Resident State Tax Return Required for a Net Loss?
- Accountant, Enrolled Agent
- Grayslake, IL
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Originally posted by @Eamonn McElroy:
I'm not going to touch on all of your questions (I counted seven), but generally speaking a state tax return is not required if you have a net source loss. Really it depends on the individual state's rules surrounding what constitutes a filing obligation.
That being said, if your strategy is to eventually sell the property, or you foresee it flipping from loss to income, it may be advisable to file a KS partnership return and a KS non-resident individual tax return to document NOL for future offset against KS source gain/income.
All questions together would make a great conversation with your tax CPA/EA.
I'm going to disagree as some states will not match the Fed. Some states require a tax return based upon the gross income. Some Cities also require a return based upon the Gross income.
Post: Is a Non-Resident State Tax Return Required for a Net Loss?
- Accountant, Enrolled Agent
- Grayslake, IL
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Originally posted by @Margaret Feit:
Thank you both for your replies. As @Eamonn McElroy pointed out, I did post an awful lot of questions in one post. Sorry for that! I would love to ask my CPA about all this, but since I do my own taxes, I have so far been unable to find a CPA who is willing to work with me at a reasonable price point just to answer occasional questions, so I don't know who to call with these sorts of questions. If either of you would be willing to pitch in on one follow-up question, I would greatly appreciate it.
I don't foresee this property ever turning an income, and we are thinking at this point that we will have to end up selling it at a substantial loss in the next year or two. (Hear the frustrated disappointment in that statement...!) At whatever point we are able to claim the losses on our federal return, either through the sale of the property or by receiving passive income elsewhere, will we be able to claim these losses on our GA tax return against our GA income, or do we never get to claim a state tax loss on them if we never have income in KS?
Thank you!
The problem is you get what you pay for. If you're not willing to invest in quality advice you won't find quality. I'm not sure what your portfolio looks like; however, you should be aware as to what is reasonable and what is not a DIY program does not answer your questions.
This link is a few years old however, those were some average rates for various forms: https://connect.nsacct.org/blogs/nsa-blogger/2017/...
You do need to file each state to maintain those losses as the gross income is your primary issue if they decide to examine a return. There are differences in depreciation between the Fed and State.
Post: Questions for the CPA's
- Accountant, Enrolled Agent
- Grayslake, IL
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In reality you should not be advising about that part AT ALL on tax implications. You should be saying directly "that is a conversation to have with your accountant as I cannot advise you on the tax consequences." You should consider pointing him to a couple different accountants so he can get his own advice.
There are facts and circumstances that may be unknown to you that you wouldn't know how to probe. Was any of this worked for agricultural or business purposes?
The short version is a remaining sale would have to happen at which point he could amend for a refund within the appropriate time frame; however, there are other facts and circumstances that may cause issues.
Post: Property Investing: ROI Tax Question
- Accountant, Enrolled Agent
- Grayslake, IL
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Daniel,
The net taxable profit of your rentals and your tax bracket are the primary function. You may find after depreciation they do not show a taxable profit currently.