December 23, 2025

How to Structure Multiple LLCs for Spec Home Building and Lower Taxes

51 minutes

In this Tax Tuesday episode, Anderson Advisors’ Barley Bowler, CPA, and Eliot Thomas, Esq., tackle a wide range of listener questions covering everything from business structures to retirement planning. They discuss the pitfalls of investing in movie production under Section 1801, explain why commuting expenses aren't tax-deductible even for long-distance work arrangements, and clarify the new 1099-NEC reporting thresholds and the upcoming 1099-DA requirements for digital assets. Barley and Eliot break down Section 179 vehicle deductions and the advantages of heavy SUVs over luxury vehicles, explain the reasonable wage requirements and distribution strategies for S corporations, and provide guidance on structuring spec house construction businesses to minimize employment taxes. They also cover mark-to-market elections for traders, the tax consequences of below-market rent to friends or family, and the complications of placing a personal residence in an LLC. Tune in for expert advice on these topics and more!

Submit your tax question to [email protected]

Highlights/Topics:

"Any thoughts about investing in movie production for high-income earners?" - Section 1801 expires 2025, creates passive losses, not recommended for most.

"I work for a local government agency in Cochise County, Arizona and live in Maricopa County, Arizona, approximately 215 miles apart. I commute in on Monday, stay in a hotel and leave on Thursday. I've been doing this every week since December of 2024. Is there a tax break deduction for this?" - No deduction available; this is considered commuting, not business travel.

"Is the new 1099-NEC now starting after $2,500?" - Still $600 for 2025; increases to $2,000 in 2026 only.

"Who needs to file this new 1099-DA digital asset form?" - Brokers must send to clients by February 15, 2026.

"I'm a sole proprietor and would like to buy a BMW X7 to save the tax based on section 179. Is it covered?" - Yes, if over 6,000 pounds; 100% write-off available first year.

"I'd like to know the proper ratio of distribution payments to salary within an S corporation." - One-third to 60% of net income is typical rule of thumb.

"Can I pay myself quarterly out of my S corporation LLC?" - Yes, quarterly W-2 payments are acceptable and help avoid penalties.

"What's the best way to structure a business to minimize taxes when building spec houses? I do the majority of the work on the houses, so it looks like a lot of profit on my labor, which is not good. I'm currently structured as a pass through LLC and purchase the house lots in a different LLC from my construction LLC." - Use S corporation for labor; sell land separately at capital gains rate.

"Is it too late for a mark to market election for 2026?" - No, must file on 2025 return by April 15, 2026.

"Is mark to market a good tax deduction?" - Only if trader status qualifies; creates ordinary losses on unrealized gains.

"I'm renting to a friend for $300 a month. Fair market rent would be over $1,500. Any tax consequences?" - Deductions limited to income received; cannot create rental loss at all.

"How can I have an LLC for my personal residence if the house is the residence of both my son and I as joint tenants?" - Possible but risks losing section 121 exclusion and homestead exemption.

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