Today, Anderson Advisors attorneys Toby Mathis, Esq., and Eliot Thomas, Esq., discuss topics including navigating inherited IRAs and potential Roth conversions to understanding crucial deadlines for spousal and non-spousal inheritances. The questions explore filing for trading LLCs with expenses but no income, leveraging C-Corps for medical cost reimbursements, and addressing real estate tax considerations including depreciation recapture. Key insights include combining 1031 exchanges with 121 exclusions when converting investment properties to primary residences, maximizing education and travel deductions in real estate transactions, and utilizing strategic business entities, defined benefit plans, and 401(k)s to shelter active income. Send your tax questions to taxtuesday@andersonadvisors.com. Highlights/Topics:   “Can you roll an inherited IRA into a Roth IRA before the 10 year liquidation time limit is over? If so, will it be a taxable event?” - Typically no, especially for non-spousal inherited IRAs. “I took 2024 off, had no W-2 income, and did no trading.” “However, I had some trading expenses, monthly subscriptions. Do I need to file an individual 1040 return and/or Form 1065 for my trading LLC, even though I had no W-2 income and did no trading?” - Yes, file to account for trading expenses. “I am in the process of creating a trading partnership with the C-Corp. Due to an accident 20 years ago, I have high medical expenses and want to use the C-Corp to reimburse my out-of-pocket medical expenses. I have caregivers who work three hours per day. Can I reimburse myself for the salary? I pay them through the C-Corp. What other medical expenses can I reimburse?” - Yes, using Section 105 plan for reimbursements. “I have short-term rental property managed by a management company. Before the end of the year, I’m taking over management duties. Does the passive income switch to active or does the passive income stay passive?” - No, managing yourself doesn’t change income to active. “When selling a rental property, do you have to pay 25% depreciation recapture tax on things that have been depreciated down to zero and have been gone or deleted for over a year?” - Yes, recapture applies to fully depreciated assets. “Can I apply both 1031 like-kind exchange and 121 exclusion to an investment property? Yes, with strategic planning for property transitions. “Can I sell my investment home, apply 1031, and make the replacement home my primary residence?” “When selling my primary residence, do seller concession expenses help stay within the $250,000 capital gain exclusion? Example, help buyer with closing costs, any repairs, et cetera. I have spent over $3000.” - No, concessions don’t impact the exclusion directly. “I have spent over $3000 on different online real estate education programs. Can I deduct these as business expenses, or are only education expenses that are not online deductible?” - They are deductible only if related to continuing existing business education. “I attend a lot of investor’s meetings in person, travel with my personal not business automobile. How can I deduct these costs as business expenses,” - Track mileage and use accountable plans for deductions. “How do I save on taxes when wholesaling properties?” - Use business entities and retirement plans strategically. Resources: Schedule Your FREE Consultation https://andersonadvisors.com/strategy-session/?utm_source=inherited-iras-can-you-convert-to-a-roth-tax-free&utm_medium=podcast Tax and Asset Protection Events https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=inherited-iras-can-you-convert-to-a-roth-tax-free&utm_medium=podcast Anderson Advisors https://andersonadvisors.com/ Toby Mathis YouTube https://www.youtube.com/@TobyMathis Toby Mathis TikTok https://www.tiktok.com/@tobymathisesq Clint Coons YouTube https://www.youtube.com/@ClintCoons

Today, Anderson Advisors attorneys Barley Bowler, CPA, and Eliot Thomas, Esq. discuss topics including how 401(k) funds can be borrowed up to $50,000 without tax penalties while confirming that backdoor Roth IRA contributions made in 2024 but converted in 2025 still allow for additional 2025 contributions. Eliot and Barley discuss why S-corporations cannot deduct wellness expenses through accountable plans unless medically prescribed, and confirm the 20% Qualified Business Income deduction applies across multiple businesses. For entity structures, they recommended against holding appreciating real estate in corporations, favoring disregarded LLCs for asset protection. Regarding trading partnerships with C-corporations, these need written contracts for guaranteed payments, and confirmed short-term rental owners can switch to self-management to claim material participation benefits and accelerated depreciation through cost segregation. Send your tax questions to taxtuesday@andersonadvisors.com. Highlights/Topics: "Are there ways to withdraw funds from a 401(k), a retirement account, without moving it into an IRA?" a sponsored plan versus an individual plan? "We're also starting a nonprofit business. And how can we avoid that 10% early withdrawal penalty?" - Take a loan from your 401(k) for up to $50,000 without tax/penalty. "I attempted to do a backdoor Roth IRA conversion. On December 24th, I did it at the end of the year. I'm a high-income earner, was not aware of the financial institution, and had made a temporary change. There was some hold time for the funds. We made a deposit contribution at the end of the year. The question here is, the $7000 post-tax contributed to the traditional IRA in December was not available to convert? We went over the past the end of the year to the 2025 tax year, and we're wondering how that's treated since the conversion was completed in 2025, but the contributed contribution occurred in 2024. Is another $7000 contribution allowed?" - Yes, you can make another $7000 contribution in 2025 for another conversion. "Can we use this to reimburse for gym membership, supplements, wellness plans, stuff like that?" - No, wellness plans aren't tax-deductible unless medically prescribed. "My S-corporation provides financial services." Another question. We're talking about the qualified business income deduction, that 199A. That's a pretty good deduction, 20%. Good chunk of deduction. "Can we take that if we have two different businesses? How does that work? What's that look like?" - Yes, you can take the 199A deduction for both businesses simultaneously. "I have two LLCs holding trading accounts, so a couple of different LLCs." We're going to talk about our trade structure a little bit differently. We also have just what we call a safe asset holding straight. If we have a brokerage account, high-value collectibles, or something like that. "Does putting a rental property into a disregarded LLC have any tax benefits?" "Can I transfer the interest of a disregarded to a holding company or to a living trust?" - Yes, with in-kind transfers; check with a broker; generally no tax consequences. "I have a trading partnership." "Do I need a contract?" We're talking about guaranteed payments here, a very unique payment to a partner. - Yes, need a written contract detailing services between a partnership and C-corp. "What are the pros and cons of holding real estate investments in a disregarded LLC, C-corp versus S-corp?"- Avoid S/C-corps for appreciating property; use disregarded LLCs with management entity. "We're buying our first short-term rental this year. Considering using a third-party property manager, can I manage the property next year with material participation?" - Yes, you can manage it yourself in year two and claim cost segregation benefits.   Resources: Schedule Your FREE Consultation https://andersonadvisors.com/strategy-session/?utm_source=how-to-use-401k-funds-to-start-a-nonprofit&utm_medium=podcast Tax and Asset Protection Events https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=how-to-use-401k-funds-to-start-a-nonprofit&utm_medium=podcast Anderson Advisors https://andersonadvisors.com/ Toby Mathis YouTube https://www.youtube.com/@TobyMathis Toby Mathis TikTok https://www.tiktok.com/@tobymathisesq Clint Coons YouTube https://www.youtube.com/@ClintCoons  

Real estate visionary Neal Bawa, CEO of Grocapitus and MultifamilyU, returns to the podcast. Neal always presents a compelling data-driven forecast that should capture every investor's attention. Despite current market uncertainties, Bawa reveals a significant 5-million-unit housing shortage alongside plummeting inflation rates, positioning the US as the strongest performer among developed economies. Most notably, he predicts a dramatic surge in both single and multi-family rent growth during 2026-27, driven by high interest rates creating supply gaps. With homeownership projected to decrease to 60% within a decade, the rental market is poised for unprecedented strength. This perfect storm of undersupply, shifting demographics, and economic conditions suggests a golden opportunity for strategic real estate investors, particularly in the multi-family sector, with promising rent growth anticipated as early as late 2025. Highlights/Topics: Hard data trumps market fear: why the numbers tell a different story US economy dominates globally as inflation drops from 6% to 2.4% Rising national wealth meets housing crisis: housing investment opportunity New construction wave promises better prices for entry-level housing market Five million unit shortage creates perfect storm for 2026-27 housing gap Massive rent increases predicted across all housing sectors in 2026-27 Historic shift: Homeownership dropping to 60%, rental demand soars nationwide Real estate investments outperform during global inflationary cycles and market shifts 2025 forecast: Interest rates and delinquencies reshape investment landscape ahead Strategic opportunity: Significant rent growth predicted for late 2025 market Visit multifamilyu.com to dive deeper into these insights! Resources: MultiFamily Website https://multifamilyu.com/ Schedule Your FREE Consultation https://andersonadvisors.com/strategy-session/?utm_source=predicting-2025-real-estate-trends&utm_medium=podcast Tax and Asset Protection Events https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=predicting-2025-real-estate-trends&utm_medium=podcast Anderson Advisors https://andersonadvisors.com/

We have now hit 237 episodes of Tax Tuesday! Today, Anderson Advisors attorneys Toby Mathis, Esq., and Eliot Thomas, Esq., discuss topics including depreciation strategies, with detailed explanations of how bonus depreciation differs from cost segregation analysis. The conversation also covers real estate professional status requirements, home office deductions, and the strategic use of management C-corporations to maximize tax benefits. Other key topics included the limitations of 1031 exchanges for partnership interests, tax strategies for international property purchases, meal expense deductions under current tax law, and the benefits of a stepped-up basis for inherited properties. You’ll hear practical strategies for leveraging existing properties rather than selling them and included insights on how to minimize tax exposure through various investment structures and borrowing strategies. Send your tax questions to taxtuesday@andersonadvisors.com. Highlights/Topics: In 2024, I spent most of my time managing rental properties under our LLC (not in a C or S management corp). I will claim real estate professional status for 2024 tax returns. What home office expenses can I deduct from rental income? Should we consider creating a management C corporation to maximize deductions? - You can deduct a portion of home expenses (mortgage interest, property taxes, utilities, etc.) based on either square footage or number of rooms method. Is 100% bonus depreciation available in 2025? Is this the same as cost seg? - Cost segregation breaks down property components into different depreciation schedules (5, 10, 15 years) while bonus depreciation allows immediate write-offs of qualifying components. If you meet 750 hours as a real estate investor and own both commercial/non-residential real estate property and residential rental property, could you use Schedule C or Schedule E on your tax return? - Generally, long-term rentals go on Schedule E regardless of real estate professional status. Schedule C might be used for short-term rentals (average stay less than 7 days) with significant personal services provided. Does selling a partnership interest in a hotel business qualify for a 1031 exchange? How can you save on taxes on capital gain when you sell your partnership interest? - A partnership interest generally doesn't qualify for 1031 exchange (though the partnership itself could exchange the building). If I inherit a property and now use the property as Airbnb, do I need to depreciate the value of the property? - You should depreciate the property because the IRS will assume you took depreciation when you sell and tax you accordingly (recapture). You'll get a stepped-up basis at inheritance value to depreciate from. Can you comment on food and meals? When can those be expensed and how much? -  Business meals are generally 50% deductible. Company-wide events like holiday parties or open houses with unrestricted attendance can be 100% deductible. Entertainment expenses are no longer deductible. I'm a full-time employee receiving W2 income and own two rental properties which I manage myself. Can I use the qualified business deduction (QBI)? - Yes, you can potentially qualify for the QBI deduction. The safe harbor rule requires 250 hours of rental services, but you may still qualify even without meeting this specific threshold if you can prove it's a trade or business. How can I avoid capital gains if I sell my rental home in the U.S. to purchase a multi-family home in Costa Rica? - Options include: living in the property for 2 of the last 5 years to qualify for primary residence exclusion, leveraging the U.S. property instead of selling, harvesting capital losses to offset gains, or investing in tax-advantaged opportunities to create offsetting losses. I have two rental properties in SoCal owned since 2009 using straight-line depreciation. If I 1031 exchange these properties into replacement properties of slightly higher value, can I start depreciation over and do it correctly? If I 1031 these properties into replacement properties of slightly higher value, does that mean I can start depreciation all over and do it correctly? Getting more tax benefit. How does this affect my basis? What about any recapture when I then sell later? - In a 1031 exchange, you'll have carryover basis from the relinquished property. The basis in the new property will be its purchase price minus deferred gain. Instead of selling, consider leveraging existing properties to buy additional real estate for more depreciation opportunities. What are the benefits of the step-up basis evaluation for a person's residence and investment property? - When inherited, properties receive a stepped-up basis to fair market value at death, allowing heirs to depreciate from the higher amount and potentially eliminate capital gains tax on appreciation that occurred during the deceased's lifetime. Resources: Schedule Your FREE Consultation https://andersonadvisors.com/strategy-session/?utm_source=bonus-depreciation-in-2025&utm_medium=podcast Tax and Asset Protection Events https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=bonus-depreciation-in-2025&utm_medium=podcast Anderson Advisors https://andersonadvisors.com/ Toby Mathis YouTube https://www.youtube.com/@TobyMathis  

In this episode, Toby Mathis, Esq., of Anderson Business Advisors, chats with Atticus LeBlanc, CEO of PadSplit. Toby and Atticus discuss the innovative approach PadSplit is taking to address homelessness and provide affordable housing. They dive into troubling statistics about homelessness in 2024 and how rising home prices and interest rates are impacting the housing market. PadSplit’s model—offering multi-room rentals—provides a solution for both underserved communities and real estate investors, creating a two-sided marketplace. The conversation covers the operational benefits for landlords, the low turnover rates, and the impact PadSplit has on helping residents transition out of homelessness. Learn how this model offers affordable housing in 24-48 hours for under $300, while benefiting investors by reducing costs and increasing revenue. It’s a win-win for both society and your investment portfolio! Highlights/Topics: Toby’s PadSplit experience, frightening stats on homelessness for 2024 Increasing home prices, interest rates are not helping single-family residences PadSplit rooms are a great solution for the underserved, and for investors Reducing barriers to entry for the unhoused, revenue increases for landlords How PadSplit operates as a two-sided marketplace Different scenarios using PadSplit for multi-room home rentals Standard costs for a “turn” as a landlord, saving with PadSplit Early intervention for issues is easier with a PadSplit scenario Residents have thousands of options if they don’t care for the room What are the eviction rates with PadSplit? What percentage of residents move from unhoused situations? This is the “invisible working population’ - not people on the street with a cardboard sign. Residents can get a room within 24-48 hours, for under $300 So something good for society, and something good for yourself Share this with investors you know Resources: Atticus LeBlanc LinkedIn https://www.linkedin.com/in/atticus-leblanc-3960466/ PadSplit https://www.padsplit.com/ Schedule Your FREE Consultation https://andersonadvisors.com/strategy-session/?utm_source=1-real-estate-strategy-for-2025&utm_medium=podcast Tax and Asset Protection Events https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=1-real-estate-strategy-for-2025&utm_medium=podcast Anderson Advisors https://andersonadvisors.com/ Toby Mathis YouTube https://www.youtube.com/@TobyMathis Toby Mathis TikTok https://www.tiktok.com/@tobymathisesq Clint Coons YouTube https://www.youtube.com/@ClintCoons

Welcome to Tax Tuesday. Anderson Advisors attorneys Toby Mathis, Esq., and Eliot Thomas, Esq., tackle various tax-related questions. Topics include retroactively claiming real estate deductions and depreciation, handling health insurance premiums for an S-corp, understanding the rules around setting up a trading account under an S-corp, and how to qualify for Real Estate Professional (REP) status while working a W2 job. The attorneys also discuss deadlines for S-election, converting properties for tax purposes, alternative methods for substantiating business expenses, and more. Tune in for valuable insights on managing your tax strategies effectively. Send your tax questions to taxtuesday@andersonadvisors.com. Highlights/Topics: "I need to retroactively claim my real estate deduction or depreciation for my 2022 and 2023 taxes. I actively manage my own rental and have over 700-plus hours per year for real estate management. How do I claim accelerated depreciation for the past years?" - Yes, you can go back and retroactively capture previous depreciation, including accelerated depreciation or bonus depreciation, you do it n the current year. It's a form called 3115. "I didn't have my health premiums added to my payroll statements for 2024. I have an S-corp and pay myself and another employee but wanted to deduct health insurance payments. Is there anything I can do at this point? Regarding asset protection, we have a rental property. We'd like to move this to a trust and then to an S-corp. Would that work?" - If the S-Corp it paying the premiums, on our 1040, we can make an adjustment on Schedule 1 for the insurance premiums because we're considered sole proprietor. "I have seen some of your videos and had a question about setting up a trading account under an S-corporation. Is this correct? Can I pay my wife $15,000 from it and then match that amount toward a 401(k)? "My wife is a homemaker with low income. If we file just married filing jointly, are there any implications with this move? We are not traders but more investors."- Typically no, we would put it into an S-Corp. "My employer recently went through a restructuring. They offered me one year's pay as severance. My last paycheck will be January, 2026. I feel confident that I'll be able to fulfill the REP status requirement for time spent on material real estate management activities in 2025. I will not make more money from my real estate investments as compared to my severance pay. Can I still qualify for the REP status? I used my solo 401(k) to invest in a real estate deal as a passive investor. The bank recently foreclosed the deal. It was a total loss. Is there any deduction that I can take for the loss?" - It’s a common misconception that you can’t get REP status with a W2. It’s about time, not how much you make. "When is the deadline to make an S-election for 2025? Can you switch back to sole proprietorship after you elect S-corp in the same year or future years? Do you have to run payroll as an S-corp LLC? What are good indicators or reasons to switch to an S-corp for taxation?" - there's something called late election, very common, we do it all the time. The IRS is very good about allowing it. To be safe it should be done by March 15th. "I'm converting a barn on my property to an auxiliary dwelling unit for realm purposes. I also have a separate building on the property that I use as a shop office for my construction business. How do I treat these properties for liability and tax purposes?" - the ADU, the Auxiliary Drilling and Dwelling Unit, that's going to be either a long-term rental or a short-term. You could use the shop office as an admin office. I’d wrap it in an LLC and strip the equity out. “My business doesn't have traditional receipts for its expenses. We primarily rely on bank statements to track our spending. What supporting documentation would I need to provide to the IRS or my tax preparer substantiate these expenses and ensure accurate tax deductions? Are there any alternative methods to proving these expenses without traditional receipts?" - A bank statement, credit card statements, can be used, proof of payments, cancelled checks, etc. "My business partner and I co-bought a condo in New York City by paying $900,000. He put in $700,000 and own 75%, and I put in $300,000 and own 25%.  I'm deeding my ownership to him for $0. What would be his cost basis for future resale?" - Basically this is a gifting, it wasn't, they didn't sell it. So for any amount, so you just carry over the basis. File a 709. Check out our free Emergency Binder on our website! Resources: Schedule Your FREE Consultation https://andersonadvisors.com/strategy-session/?utm_source=how-to-move-a-rental-property-to-a-trust-s-corp-for-asset-protection&utm_medium=podcast Tax and Asset Protection Events https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=how-to-move-a-rental-property-to-a-trust-s-corp-for-asset-protection&utm_medium=podcast Anderson Advisors https://andersonadvisors.com/ Toby Mathis YouTube https://www.youtube.com/@TobyMathis Toby Mathis TikTok https://www.tiktok.com/@tobymathisesq Clint Coons YouTube https://www.youtube.com/@ClintCoons  

Today Clint Coons, Esq., sits down with Winston Templet, a seasoned real estate investor, developer, and contractor with over 20 years of experience. Based in Tennessee, Winston shares insights from his extensive career, including his early days as a reluctant real estate investor, where he began with trailer parks. They dive into the state of real estate investing in 2025, with Winston emphasizing the shift toward building rather than buying. Winston explains his approach to finding profitable properties, partnering with land sellers, and navigating complex regulations, zoning, and permits. He also offers valuable advice on selecting general contractors, financing options, and how to avoid common pitfalls, particularly for first-time investors. Throughout the conversation, Winston highlights the importance of education and building strong community relationships as keys to success in real estate. Winston Templet is a seasoned real estate investor, developer, and contractor with over two decades of experience in the industry. Based in Tennessee, he has built a substantial real estate portfolio, demonstrating a keen ability to identify and capitalize on lucrative opportunities in the market. Winston co-founded "The Real Estate Templet," a platform dedicated to educating and empowering individuals of varying experience levels on real estate investment and development. Winston's passion for real estate is matched by his commitment to educating the next generation of real estate professionals. It is his firm belief that education is the key to success. Highlights/Topics: Clint’s introduction of guest Winston Templet A reluctant real estate investor - the trailer park story The state of investing in 2025, builds instead of buying How Winston finds properties, sharing wealth with land sellers, partnering for success Regulations, zoning, permits, etc. How to approach city and municipal offices, proposing zoning changes Key costs that must be considered - engineering fees, sprinkler systems, green energy requirements Financing recommendations, building relationships with community lenders, cash refi’s from other properties Selecting general contractors - it is crucial to research, get referrals, and hire the right people, never pay money upfront! First-timer mistakes to watch out for Setting up protections from liability with the right business entities Closing comments, final words of advice Resources: Real Estate Templet on IG https://www.instagram.com/realestatetemplet/ The Real Estate Templet On YouTube https://www.youtube.com/@UCs57I294Kvkpwtw3PQoaXGQ Schedule Your FREE Consultation https://andersonadvisors.com/strategy-session/?utm_source=the-real-estate-investing-strategy-that-is-taking-off&utm_medium=podcast Tax and Asset Protection Events https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=the-real-estate-investing-strategy-that-is-taking-off&utm_medium=podcast Anderson Advisors https://andersonadvisors.com/ Anderson Advisors Podcast https://andersonadvisors.com/podcast/ Clint Coons YouTube https://www.youtube.com/channel/UC5GX-U6VbvMkhSM1ONBiW8w  

Welcome to the first Tax Tuesday episode of 2025. Anderson Advisors attorneys Toby Mathis, Esq., and Eliot Thomas, Esq., discuss topics including whether hours spent on personal and rental properties count towards real estate professional status, the tax implications of using an LLC for a brokerage account that generates short-term capital gains, and how to handle HOA dues when calculating the cost basis of a condominium. They also discuss the consequences of failing to issue a 1099 to contractors, how to navigate a tricky 1031 exchange, and strategies to minimize capital gains taxes when selling a rental property. You’ll hear about ways to structure personal and business finances for educational deductions, managing a 401(k) loan from a tax perspective, and tips for maximizing tax benefits as a 1099 medical professional. Send your tax questions to taxtuesday@andersonadvisors.com. Highlights/Topics: "I have a solo handyman business, do my hours performing services for homeowners and real estate investors properties count towards rep hours. Do my hours working on my residence count towards rep hours if I plan to move out and rent the house?" - Absolutely. That's exactly what you're supposed to do. That time is exactly what we're looking for to get over 750 hours of material participation in the management of your properties, et cetera. "I am selling weekly options and was advised to put my brokerage account into an LLC taxed as a partnership. Doesn’t this expose me to the same tax liability I have now with no LLC? What is the best tax strategy for a brokerage account that is making a large profit that is all from short-term capital gains?" -No, you're not going to have the same tax liability by putting it in that type of partnership. But there's a lot of other things you can do. "When calculating the cost basis of a condominium, how does one identify and add the portion of HOA dues spent for capital improvements to the property?" - If it's your personal residence, we don't deduct HOA costs. "What happens if I don't issue a 1099 to an outside contractor? How do you spend a virtual assistant who made over $15,000?" - You can get penalized up to $600, perhaps more, if you don't get the 1099 out. VA’s overseas, if not a US taxpayer, you don’t need to send a 1099. "How many properties must I acquire to meet the real estate professional status?" - The number of properties is irrelevant. You could have one, you could have a hundred. It's how much time you put into it. "I have a rental property that I would like to sell. I purchased it in 1999 for $175, 000. The current value is $450,000–$500,000. How can I reduce capital gains taxes?" - The quick, real easy, no brainer answer, you could do a 1031-like kind of exchange. "I'm in a 1031 exchange gone bad. The funds are with the intermediary in the escrow account. The replacement property seller did not cooperate and the deal is falling through. Now what can I do?" - Quick answer, you can pay tax. You could try and make the payments in installments. "Can I structure and set up something through my business and nonprofit or personally that will allow me to deduct my child's college education expenses." "I'm aware of state-specific 529 programs." - You don't get a tax deduction for a 529 plan. "I currently have a loan on my solo 401(k) and I want to pay it off early and turn around and take out another loan. How do I handle that from a tax perspective?" - You need to check with your particular plan. I just throw that out there for people who are thinking maybe of doing the same. "I am a 1099 medical professional. What can I do from now on to properly prepare myself to maximize my tax situation? I'm on the payroll for my S-Corp and managing the 1099 income through the S Corp." "I don't know if I should be doing anything else." - Quarterly tax meetings. That's always the answer. Putting it in an S-Corp was the right thing. Resources: Schedule Your FREE Consultation https://andersonadvisors.com/strategy-session/?utm_source=how-to-reduce-capital-gains-taxes-when-selling-a-long-held-rental-property&utm_medium=podcast Tax and Asset Protection Events https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=how-to-reduce-capital-gains-taxes-when-selling-a-long-held-rental-property&utm_medium=podcast Anderson Advisors https://andersonadvisors.com/ Toby Mathis YouTube https://www.youtube.com/@TobyMathis Toby Mathis TikTok https://www.tiktok.com/@tobymathisesq Clint Coons YouTube https://www.youtube.com/@ClintCoons  

It’s our last Tax Tuesday episode of 2024! In this episode, Anderson attorneys Amanda Wynalda, Esq., and Eliot Thomas, Esq., address several listener questions on a variety of tax topics. They cover the tax implications of moving into a rental property, including how it affects capital gains and depreciation. They discuss the possibility of using an LLC as a management company for rental properties, allowing for contributions to a personal IRA. Eliot and Amanda also explain how negative cash flow from rentals can affect deductions and tax filings, the importance of staying organized with rental property expenses, and the consequences of transferring ownership in a 1031 exchange. Other topics include options for offsetting passive income with retirement accounts, consolidating LLCs under a Wyoming holding company, deductions for 529 plans, and the stepped-up basis for gifted stocks. Tune in for expert advice on these and more! Submit your tax question to taxtuesday@andersonadvisors.com Highlights/Topics: What are the tax implications of moving into one of our rentals? Bought the property 13 years ago, have never lived in it, taken expenses and depreciation on the returns or should we just rent it from ourselves through our property manager? - Just moving in, no real tax consequence. Once you move in you’re not paying capital gains. The 13 years will be considered ‘non-conforming use’. Don’t rent it to yourself. I own three rental properties. Can I use that LLC as a management company? Take a 10 to 15% management fee and use that money as an earned income to allow contribution to my personal IRA. Would that contribution be deducted from my rental income as cost to the rentals and Schedule E? When is the deadline for the contribution. My LLC has some expenses too. If my net income is only $3,000, can I still contribute $7,000 to my personal IRA and deduct that amount? - You’re running passive rental income through a mgmt company to make it ‘active’ income, yes you can do this. You need a management agreement that you actually pay before December 31st. Can I use negative cash flow as a deduction towards income /capable gains? I'm in California and nothing cash flows for at least a few years. If I'm negative $1,000 or more cash flow, is this a deduction against passive income or capital gains? - Capital gains come in when you sell the property. You can pull passive losses from other properties you own. What expenses are incurred for rental properties or tax deductible and what is the best way to stay organized when keeping records of bills and expensive for rental properties to make it easier at tax time? - Google IRS Schedule E page 1. There is a list there to refer to. Good bookkeeping is essential. Can I transfer the ownership of a property owned by an LLC tax as a partnership that I purchased as a replacement property in a 1031 exchange or will that trigger a taxable event? - Yes you can transfer, but it will trigger a taxable event. My wife receives income from multiple sources, real estate rental, consulting, etc. We plan to set up a C Corp to consolidate the passive income and offset some of that income with retirement contributions into a solo 401 (k). Unfortunately, we did not set up the C Corp in time for the tax year 2024. What options do we have with respect to retirement accounts to offset her passive income for 2024. What can we still do? - Consulting is not usually passive income. Can multiple individual LLCs mix of small business and rentals be consolidated into one tax return under a Wyoming holding company? If so, is that a recommended practice? Adding in a small business? - For rentals this is a standard protection structure, one property per LLC. You can add the active, but we would not recommend it. How much can we deduct with a 529 plan for our kids?- Some states may give you a deduction, but at the federal level there is no deduction. If I gift my stock to my aging dad and become the beneficiary the stock when he passes will I get the stepped-up basis after I inherit them? - This is fantastic. Yes, you can do this. This is great, but they have to live for at least one year after the gift, and you have to make sure he’s actually going to leave it to you upon his death! Resources: Schedule Your Free Consultation https://andersonadvisors.com/strategy-session/?utm_source=consolidating-llcs-under-a-wyoming-holding-company&utm_medium=podcast Tax and Asset Protection Events https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=consolidating-llcs-under-a-wyoming-holding-company&utm_medium=podcast Bookkeeping Packages from Anderson Advisors https://bookkeeping.andersonadvisors.com/ Anderson Advisors https://andersonadvisors.com/ Toby Mathis YouTube https://www.youtube.com/@TobyMathis Toby Mathis TikTok https://www.tiktok.com/@tobymathisesq

In this episode of Tax Tuesday, Anderson Advisors attorneys Clint Coon, Esq., and Eliot Thomas, Esq., discuss essential tax strategies for business owners and investors. Topics covered include late S election strategies, the best approach for payroll and officer compensation, and the benefits of Solo 401(k) plans over Roth IRAs. You’ll hear about how to tackle tax implications for cryptocurrency staking, offshore trusts, and real estate professional status. Additional insights include structuring holding companies for real estate investments, deducting rental expenses, and handling business losses. Tune in for expert advice on navigating complex tax decisions.   Send your tax questions to taxtuesday@andersonadvisors.com. Highlights/Topics:  "I'm considering a late S election effective January 1st of 2024." Okay, so we're going back in time here for an LLC. "I understand it's late in the year to get everything in order. I've heard others recommend an option to avoid payroll for 2024 by issuing a 1099 miscellaneous as officer compensation in lieu of a late payroll, then get payroll set for 2025. Would you suggest this 1099 approach, or is there still time to get payroll done for all of 2024?" - We don't advise this here at Anderson. We want you to roll the proper W-2 payroll. Yes, there's plenty of time. “What type of businesses do I need to set up a Solo 401(k) or Roth IRA?” - Look at the Solo 401(k) and use the Roth component built into the Solo 401(k) versus doing a Roth IRA because it gives you a little more flexibility in the control of those funds. "Can you review the contribution rules for a Solo 401(k) and for an IRA in 2024? For instance, when you defer income at year end and make a company match, then also the IRA contribution if possible?” - You can contribute up to $23,000 as the employee, and then the employer can contribute up to 25% of your earned wages "I invested in a cryptocurrency a few years ago. I have been staking it directly on the network, and in return, I receive a staking reward. How is the crypto activity taxed?" - The staking is usually considered ordinary income. That means it's going to be taxed at ordinary rates and very likely is subject to employment taxes. “I've been considering opening an offshore trust that owns an offshore LLC that engages in forex day trading business in the Cayman Islands. I only pay taxes on distributions received from the trust that way, I can grow capital outside the US. Am I on the right path here? And are there other consequences that I should consider?” - The way the US taxes individuals is that when we say worldwide income, it's not the income you earn in your own name. It's also the income that you earn through entities that you hold an interest in. "I have a real estate professional status." (We call it REP status for short.) "I have invested in both traditional, rentals, and syndications, both use cost segregation and bonus depreciation. Can I claim the paper loss from real estate syndications together with our other rental activity after electing to aggregate all real estate activity? Is it allowed to claim all losses, or the ones from syndications disallowed?" - You have to work over 750 hours in a real estate trade or business that you ‘materially participate’ in. That could be I sell houses, real estate agent, things like that. I manage houses, anything like that, and that has to be over 50% of your work week. Typically, it's difficult to do if you have a W-2 job.  "I own three separate holding companies, LLC taxed as a partnership for my real estate." We'd always recommend that, some oil, and mineral rights. "A second taxed as a partnership for active real estate flips." We might have an issue with that. "S-corporation for technology consulting." "I saw Anderson videos on holding a passive brokerage account, not active trading, in an LLC for asset protection. Where do you recommend I'd place this? Would it go into one of these other LLCs or some other holding company? I would prefer to avoid an extra annual federal tax filing if possible." - I would keep it completely separate because you've got this one set up for the oil, this one set up for the real estate, this one here is our active business. Putting your brokerage, your savings account into any of those entities just wouldn't make sense to me. "I have a primary residence that I plan to rent after one year, which would be in December. If I put it into service this year, can I deduct expenses that were needed to make it ready for that rental, such as a cost seg for this year?” - It’s a question of when it is placed into service. If we've already placed it in the services and we start, depending on what we're doing to improve on it, if it is just an improvement, that's still just going to go to basis, and we would depreciate it now that it's a rental. “Clint recommends using a partnership holding company for residential real estate investment. "Do I need to start a new IRS filing submission with a partnership holding company or keep it on my existing Schedule E, personal IRS filing? I have 25 investment homes, so I'd like to minimize the amount of work for this change. I'm not sure how to do this accounting change." - You can write out 25 little boxes down here that all lead up to just one entity, Wyoming holding. We'll make them do all 25. "I have a relatively new corporation whose expenses exceed income," so we've got losses. "Can these expenses be used to offset income in 2025? If so, how would I indicate this on this year's tax return?" - If we have more expenses than income, it's a loss, it can carry forward into the next year. Resources: Schedule Your FREE Consultation https://andersonadvisors.com/strategy-session/?utm_source=staking-crypto-how-are-rewards-taxed?&utm_medium=podcast Tax and Asset Protection Events https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=staking-crypto-how-are-rewards-taxed?&utm_medium=podcast Anderson Advisors https://andersonadvisors.com/ Toby Mathis YouTube https://www.youtube.com/@TobyMathis