April 18, 2023

The Most Important Step Before Buying A Business

58 minutes

Welcome to another episode of the Tax Tuesday show. Host Toby Mathis, Esq., joins our regular guest Eliot Thomas, Esq., Manager of Tax Advisors at Anderson Business Advisors, to help answer your questions. Even though it’s tax season, we have nine Anderson staffers on board to answer your questions

On today’s episode, Eliot and Toby answer listener questions including inquiries about purchasing a bar/restaurant and all the aspects you need to take into consideration around this difficult industry, a few questions (as usual) around rental properties and when/if you can take deductions and write off losses, and an interesting code question about oil and gas and intangible drilling costs (IDC).

If you have a tax-related question for us, submit it to taxtuesday@andersonadvisors.

Highlights/Topics:

If you have a corporation with your children as board members, can you write off vehicle, maintenance, and gas? - If they are not employees, they are eligible for “reimbursements” not written off as business expense.

Spouse and I are filing joint 2022 return, she had a $6000 W2, can I make a $3000 contribution, or must it be made to her IRA because it’s her W2? - If you made less than the $13K deduction, no taxes are owed. If you contribute to a Roth, no taxes….

Can you discuss Tax benefits of retirement funds to fund/start/loan my business? - buy shares of a C Corp with your retirement fund.

Tax effects of intangible costs for oil and gas? - IDCs can give you a 100% deduction in certain cases

Paid kids $12K for my rental business, should I issue a 1099? If its disregarded or a partnership, kids under 17 can be issued a W2, if under age 18 no taxes due.

Bought a house in 2022 with plans to rent, still working on repairs, do I get tax benefits for this project? - No, it has to be placed into service to be eligible for losses/expenses…

How do I do cost seg if I purchased and rented out in 2022? Accelerated depreciation? - Cost seg is all about depreciation, yes you can do it to take advantage. Once cost seg is done, extend until Oct 15.

I purchased Airbnb 2022, and put into use same day, purchased furniture/renovated, my accountant says I have a loss and am unable to do bonus depreciation? – There are other factors, but did you materially participate? If so, yes that is ordinary loss.

When should I file as S-Corp instead of disregarded entity? not single entity…. - Don’t put real estate rentals in a corporation, when you take it out it’s taxable…

Is there an AGI limit for claiming passive losses on a return? - If you have rental activity, under $100K, you can write off $25K. Can they be carried forward? How to claim next year? - Yes, passive losses can be carried forward as “suspended”.

I’m considering purchasing a bar/restaurant in FL, already established but not doing well, what should I consider before doing this purchase? - Are you buying the assets, or the entity that owns the bar - if the entity, you may inherit any legal issues and no depreciation. If you buy assets, you can depreciate assets at the price you paid.

Resources:

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