Are you and your friends getting the runaround from accountants, attorneys, and others charging for tax advice? Toby Mathis and Jeff Webb of Anderson Advisors set you straight and answer your tax questions. Do you have a tax question? Submit it to taxtuesday@andersonadvisors.

Highlights/Topics:

If somebody inherits property through a probate, how can you avoid capital gains? When someone dies, capital assets step up to fair market value and costs $0 in capital gains   

What are typical percentages of improvement value for the cost segregation of personal property for 5, 7, and 15 years? About 20%, if property is less than 20 years

If someone sells inherited real estate for less than appraised value, can they take a tax loss? Depends, but usually not on personal use property

What constitutes being a real estate professional? 750 hours of professional time in real estate and material participation in real estate activities

If I move to a different state, does my LLC need to be registered in new home state? Depends, if LLC is separate entity/location, it doesn’t need to be registered in new state

Does a home-based business help with lowering taxes and need to be incorporated? Does allow some deductions, if business is profitable; doesn’t need to be incorporated

Can I change my LLC taxes from one year to the next? Yes, but some limitations exist

Can an LLC be recategorized from a sole proprietorship to C or S Corp in mid-year? Yes, but there are rules to follow and tax forms to complete      

If you’re doing an online business, such as an app, does LLC need to be in your own home state? No, if only doing interstate commerce

Is equity stripping a necessity in real estate asset protection? Yes, stops lender and others from getting entire equity from your property

What is the 199A deduction? 20% deduction on qualified business income

If I start private lending to individual investors, is it possible to take the 199A deduction? Yes, maybe; if designated as specified service

What’s the definition of dealer? What are the ramifications? Depends on your intent when purchasing the property; dealer buys something to sell it, investor buys and holds it   

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Resources

Types of Wills and Trusts

Using Cost Segregation in Residential Real Estate

Bonus Depreciation

Modified Accelerated Cost Recovery System (MACRS)

How to become a Real Estate Professional for Tax Purposes

Howard Spiva (Attorney)

Tax Cutting Jobs Act (TCJA)

Home Office Deduction

Form 2553

Section 199A

1099-INT

Section 121 Exclusion

1031 Exchanges: 10 Things to Know

Toby Mathis

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