How do you calculate taxes for flipping houses? Toby Mathis and Jeff Webb of Anderson Advisors answer your tax questions. Submit your tax question to taxtuesday@andersonadvisors.

Highlights/Topics:

Is there depreciation recapture on a business vehicle when it is sold or no longer used for the business? Depreciation recapture works differently for personal/tangible property than for real estate. So, anything that's not real estate and intangible, such as a car.

Inherited IRAs: Are distributions taxed no matter what or can you shelter them with cost seg and depreciation from short-term rentals? Can you shelter with long-term rentals? It doesn't matter if the IRA is inherited, the distributions are taxable because you could have cost segs or short-term rentals from somewhere else that are offsetting that income. IRAs, unless it's a Roth IRA, are always going to generate taxable income.

I am a physician in a single-specialty practice under an LLP. I have set up my personal PLLC in the state. Do I need to set up payroll and give myself a W-2? It depends. Most states require that you're an S-corp. You are going to have to take a reasonable salary that is about a third of all the net profit.

We made $200,000 on our first flip, we closed in April 2022. How much should we put aside for IRS taxes? Would you happen to know how much we should put aside for state taxes as well? if you were set up as a business before you made the $200,000, then you just made the 200,000 and that's it. Pay the tax.

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Resources:

Wills and Trusts

https://andersonadvisors.com/living-trusts/

Turo

https://turo.com/

Retirement Planning

https://andersonadvisors.com/retirement-plan/

Unrelated Business Income Tax (UBIT)

https://www.irs.gov/charities-non-profits/unrelated-business-income-tax

Form 1065

https://www.irs.gov/forms-pubs/about-form-1065

Toby Mathis

https://tobymathis.com/

Anderson Advisors

https://andersonadvisors.com/

Anderson Advisors on YouTube

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Anderson Advisors Podcast

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