Did you happen to watch Saturday Night Live with Elon Musk? Was it a waste of time and money? Maybe you should ask Toby Mathis and Jeff Webb of Anderson Advisors to answer your questions about buying a Tesla, investing in bitcoins, and other cryptocurrencies. Submit your tax question to taxtuesday@andersonadvisors.

Highlights/Topics:

I would like to make my investment condo my primary residence for tax benefits upon its sale - without sleeping there 731 days over five years. Is that only a safe harbor measurement or a hard-and-fast rule? Refer to Section 121 - Capital Gains Exclusion because your primary residence is where you spend the most nights

How can I take profits out of an S Corp without paying a lot in taxes? If you are the 100% shareholder of the S Corp, whatever profit that S Corp has, that’s your income and you pay tax on that income, regardless of whether you take money out of that S Corp or not

How do you account for remodeling expenses versus maintenance expenses for a rental property? Maintenance expenses or repairs are expenses for keeping the asset at its current value; remodeling expenses are improvements such as renovations or a betterment to increase the value of the asset

Can an employer contribute to a profit-sharing retirement plan if there was no profit for the year? It has nothing to do with profit, but it does help to have profit to pay the contributions or create a loss

If my business and house are in my revocable living trust when I die, what kind of tax will my kids (the beneficiaries) have to pay on getting the business or the house? When you die, a portion of the assets in the revocable living trust go into an irrevocable trust, so your estate may pay tax, but beneficiaries will never pay tax on inheritance or gifts

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Resources:

Infinity Investing: How The Rich Get Richer And How You Can Do The Same by Toby Mathis

http://aba.link/infinitybook

Opportunity Zones FAQ

https://www.irs.gov/credits-deductions/opportunity-zones-frequently-asked-questions

Entity Formation

https://andersonadvisors.com/entity_formation/

Retirement Plans

https://andersonadvisors.com/retirement_plan/

Bitcoin

https://bitcoin.org/

Wills and Trusts

https://andersonadvisors.com/living_trusts/

Real Estate Professional Requirements

https://www.irs.gov/pub/irs-utl/33-Real Estate Professionals.pdf

Capital Gains and Losses

https://www.irs.gov/newsroom/capital-gains-and-losses-10-helpful-facts-to-know-0

Tax Cuts and Jobs Act (TCJA)

https://www.irs.gov/tax-reform

Section 26 U.S. Code 1400Z

https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section1400Z-2&num=0&edition=prelim

Step-Up in Basis

https://www.investopedia.com/terms/s/stepupinbasis.asp#:~:text=A%20step%2Dup%20in%20basis%20is%20the%20readjustment%20of%20the,for%20tax%20purposes%20upon%20inheritance.&text=The%20asset%20receives%20a%20step,of%20property%20transferred%20at%20death.

Section 121 - Capital Gains Exclusion

https://www.irs.gov/taxtopics/tc701

Bonus Depreciation

https://www.irs.gov/newsroom/new-rules-and-limitations-for-depreciation-and-expensing-under-the-tax-cuts-and-jobs-act

Depreciation Recapture

https://www.investopedia.com/terms/d/depreciationrecapture.asp

1031 Exchange

https://www.irs.gov/pub/irs-news/fs-08-18.pdf

Unrelated Business Income Tax (UBIT)

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

Unrelated Debt-Financed Income (UDFI)

https://www.irs.gov/pub/irs-tege/eotopicn86.pdf

Cost Segregation Authority

https://costsegauthority.com/

Nexo - Banking on Crypto

https://nexo.io/

Section 168(k) Tax Deduction

https://www.irs.gov/newsroom/additional-first-year-depreciation-deduction-bonus-faq

Section 179 Tax Deduction

https://www.section179.org/section_179_deduction/

Form 1040

https://www.irs.gov/forms-pubs/about-form-1040

Form 3115

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