October 31, 2023

Can You Benefit From A Cost Segregation At Any Time?

1 hour 7 minutes

In today’s Tax Tuesday episode, tax experts Toby Mathis, Esq., and returning guest Jeff Webb, CPA, CFO of Anderson Business Advisors, discuss the usual mix of complex and simple tax questions including questions around paying minor children through your LLC, gifting vs. inheriting property, structuring your stock trading business, and how and when to use cost segregation to get the biggest tax benefits. Submit your tax question to taxtuesday@andersonadvisors.

Highlights/Topics:

“When dissolving a C-Corporation with a single share holder and having a net operating loss, does the loss go on the shareholder’s personal return and can the loss be offset against personal income?” No, because that C-Corporation is its own entity. However you probaby finance some of those losses. Anything that you invest in the company that you don’t get back will be a capital loss to you.

“I jointly-own an inherited property that is currently on the market. Can the expenses that I have (utilities, staging, maintenance, repair, taxes) be added to the cost value?” It depends on how the property is being used once you inherit it.

“Can I deduct expenses for working at home and what forms can I use?” That depends. If you’re an employee, then no deduction anymore for employee work expenses.

“My wife’s father wants to sign his house over to us and her brother. What tax advantage is that to her dad? And what tax issues does it raise for us? Should we start an LLC or some other structure?” No tax advantages for Dad. When dad transfers the property over, it’s a gift. And when you give an appreciated asset you receive the basis of the gifter. If it is an investment, it is best to start an LLC.

“When you have a C-Corp (no income at this point, a Wyoming LLC that owns two LLCs with rentals), which entity pays for general expenses like memberships, cell phones, internet, education, etc?” When you have an LLC with rental (C-Corp), then you pay the C-Corp and management fee. The C-Corp then covers all the expenses.

“How does paying for your child (under 18) help with taxes, if any?” If under 18 through LLCs, there is no employment tax.

“Can you benefit from cost segregation at any time?” The longer you wait, there’s nothing left to depreciate. A tiny benefit, if any.

“Need to move from sole proprietorship to some form of business entity. [...] C-corp? Something else?” Jeff is not a fan – there’s a lot of landmines out there. If you’re doing well, you want the capital gains. Put your cash in an LLC with an 80/20 split. Watch how to structure a trading business!

“I currently own a home in one state (Oregon) and I am looking to purchase an investment property in another state and plan to do so using an LLC or an S-Corp. [...] What would be the easiest way to go about this?” Do not own in an S-Corp! Buy the AZ property in a land trust and LLC. Have someone guide you through this process

“If I invested $30,000 in a marketing class to start a marketing company, do I have to amortize it over 15 years to see any of it back? Can it be a business investment and get it all back?” The only ones that can do this are C-Corps.

“Is 1245 property subject to depreciation recapture if the rental property is sold with capital gain?” Gain is subject to recapture. You’re going to pay ordinary income tax.

Send us your questions, and check out the event schedule listed in the resources section.

Resources:

Infinity Investing

https://infinityinvesting.com/

Email us at Tax Tuesday

[email protected]

Tax and Asset Protection Events

https://andersonadvisors.com/real-estate-asset-protection-workshop-training/

Anderson Advisors

https://andersonadvisors.com/

Toby Mathis YouTube

https://www.youtube.com/@TobyMathis

Toby Mathis TikTok

https://www.tiktok.com/@tobymathisesq

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