Anderson Business Advisors Podcast

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Anderson Business Advisors Podcast

Real Estate Investors, Stock Traders, and Business Owners guide to preserve their wealth, protect their assets, and prosper in the future. Anderson Business Advisors' Attorneys and Professional Advisors share tax reduction strategies and asset protection techniques to protect and build your wealth.

  1. NOV 26

    Demystifying Cost Segregation: How Landlords Can Maximize Tax Savings on Property Investments

    In this episode of Tax Tuesday, Anderson Advisors attorneys Eliot Thomas, Esq., and Amanda Wynalda, Esq., dive into various tax strategies. You’ll hear about renting property to your business, self-rental rules, and IRS grouping options. Then, we address the sale of a California primary residence, including the $500,000 capital gains exclusion for married couples. We’ll explore cost segregation for landlords and the 1244 stock loss provision for individuals. We also have answers about tax implications for C Corps, including reimbursement rules for accountability plans and transitioning from LLCs. Lastly, we touch on Opportunity Zones, rental property sales strategies like 1031 exchanges, and the tax impact of converting a rental to a primary residence.Submit your tax question to taxtuesday@andersonadvisors.com Highlights/Topics:   So can I rent real property to my business? - Check self-rental rules, and the ‘grouping’ option from the IRS Just sold our primary California residents in July for a million and ninety thousand dollars. We purchased it five years ago for six hundred and fifty thousand, with three hundred thousand down and a three hundred fifty-thousand-dollar mortgage. Any taxes due considering the 121 married filing joint exclusion of five hundred000 capital gains. - We're going to look at the sales price, less our ‘adjusted basis.’ Could you give an example about cost segregation? Have you heard? I have heard you talk a lot about it and they're kind of confused. I'm thinking about becoming a landlord. How can I do a cost segregation on, for example, the appliances that come with a purchased property? - The building itself has straight-line depreciation over many years. Contents of the building are depreciated at different rates. Is the 1244 stock loss provision, a $50,000 tax credit, that is dollar for dollar, against your 2024 interest, social security and passive incomes on your 1040 for 2024. - 1244 is only applicable to individuals, as a deduction/loss. It reduces your taxable income. When using the accountability plan for a C Corp, do the charges have to be made from the employee's personal account to qualify, and what happens if those charges are made on the company credit card? - The individual needs to pay for them first personally of their own pocket for a reasonable business expense, then submit for reimbursement. We purchased our first commercial building this year. Even though I knew in the back of my mind the property was in an opportunity zone, it did not hit me until a couple days ago. Is there still an advantage for us to go into the opportunity zone route? I believe the only benefit at this point is a 10-year mark and step-up in basis. Is this correct? I believe there would be some elections we would have to make in a fund. Can you explain how it all gets set up and what we would need to do? - Once you obtain that property, a stopwatch starts, and you have 30 months to substantially improve it. You had to put the funds into the Opportunity Zone fund, which is the business entity, and then purchase the property there, not going to be able to back into it. We are changing our LLC from being disregarded to being a C corporation. Over the year we have moved substantial money from our LLC to our personal accounts as distributions. Do we need to relabel those as dividends and would we be able to transfer the funds back, or does the C Corp election only affect forms from the date of transition, meaning we'll file a split return 1040 for a disregarded entity, 1120 for the C Corp? Thank you for all the great media you guys put out. - Nothing happens with the previous activity, but going forward you can’t take money out in the same way. We have rental property bought originally in 1991 as our residence. The current tenants want to purchase the property. What is the best way to approach this? To lower capital gains, we are considering using the funds either to purchase another property or invest

    46 min

  2. NOV 12

    Turning Your Home into a Rental: Keeping Your 121 Exclusion Intact

    n this episode of Tax Tuesday, Anderson Advisors attorneys Eliot Thomas, Esq., and Toby Mathis, Esq., tackle a variety of listener questions. Topics include strategies for managing cryptocurrency gains, converting a primary home to a rental without losing the 121 exclusion, and navigating the primary residence exclusion when selling a home. They also discuss the benefits of forming an LLC for consulting income, handling rehab costs for a fix-and-flip property, and meeting the Real Estate Professional criteria for tax purposes. Toby and Eliot dive into depreciation recapture, 1031 exchanges, and how to structure property ownership to avoid taxable events. Tune in for expert insights on real estate and tax strategies for investors and homeowners alike.Submit your tax question to taxtuesday@andersonadvisors.com Highlights/Topics: By crypto, I bought $125,000, $24,000 invested $30,000 is now over $1 million, scared to sell because of the 35 % tax. Hold on until $125,000, $25,000 for 20%, but I'm scared the price is in my portfolio. How can I get around the 35 % legally? - If you will have other losses from other sales, you can use those to offset in the short-term… How do I convert my primary home into a rental without losing the 121 exclusion? - You can do this but you must meet the 5-year primary residence provision. My wife and I are selling our primary residence. We'll be listing the house for sale before we have lived in it quite two years. But assuming that closing takes about 90 days, it'll be over two years at the closing. Will this be acceptable for using the primary residence exclusion? - The clock starts when you have the title in possession, so the clock also STOPS when the new buyer takes possession of the title. I will be starting a consulting position in December. Is it better to create a LLC to receive wages or should I receive funds in my name? What are the benefits of creating the LLC? - If your employer agrees to pay you with 1099, you should have an S or C Corp LLC to protect your wages. We haven't sold our fix-and-flip property After one year and are considering renting it instead How should we handle the rehab costs and office expenses and our tax return? The property is held in a disregarded LLC. - First we have to establish your “intent” - if you weren’t sure… you’re ok to leave it in that disregarded entity. I've never been able to claim real estate professional due to a full-time W2 job. As of December 31st, 2023, I took early retirement. However, I was paid a severance until December 2024. During 2024, I have been leasing, advertising, physically rehabbing new property, responding to maintenance, etc. I'm also a licensed real estate broker in Kentucky where my properties are. I materially participate in 100 % of the rental activities. Can I claim real estate professional for 2024, even though I was being paid severance but not working my previous corporate job? - Yes, you can, as long as you meet the REP criteria. When calculating capital gain from the sell of a rental property is the gain from the depreciated cost basis or cost basis after the depreciation recaptured. It's the gain from the recapture cost basis or cost basis. For example, I bought at $100,000, sold at $200,000, that's how you're supposed to do it, had $50,000 in depreciation. Woo. Would it be $100,000 capital gains tax plus the tax on the $50,000 depreciation recovered or $150,000 capital gains? - The first 50,000 is what's subject to depreciation recapture…the 100K is “straight capital gain” I know it's a broad question, but would love for you guys to discuss depreciation recapture at sale after cost segregation has been formed on an investment property. If it helps, you could do, it could be a cost segregation on a pizza shop. - it depends on the different categories of whatever was in the building. Our rental LLC owned by a Wyoming holding LLC sold a Toronto property for a huge gain. We hear all these

    1h 9m

  3. NOV 5

    Conservation Easements in Crisis: What the New IRS Rules Mean for You!

    In this episode, Toby Mathis, Esq., of Anderson Business Advisors, chats with Tyler Surat of One Tree Advisors. Tyler is a seasoned expert in tax mitigation and land conservation strategies, who is helping clients utilize conservation easements to preserve land while mitigating taxes. You’ll hear the definition and benefits of conservation easements, the challenges posed by IRS scrutiny on certain easements due to misuse by "bad actors," and the importance of understanding state-specific tax laws. Tyler emphasizes the necessity of due diligence before pursuing an easement, considering factors like property registration and the differences between group and individual applications. Tune in for valuable insights into navigating the complexities of conservation strategies and tax implications. Highlights/Topics: Toby introduces Tyler, from CPA to CFO What is it, and what’s covered under a ‘Conservation Easement’? The IRS is contesting some easements from ‘bad actors’ in the real estate business Groups vs. individuals Is the property on a National Registry? Tax laws in your specific state need to be considered Audits can be a risk due to past individuals who have misused this tax break Due diligence is essential before requesting an easement Get in touch with Tyler at his email below with your questions Share this with new investors you know Resources: Connect with Tyler Surat Email: tsurat@onetreeadvisors.com tsurat@onetreeadvisors.com Schedule Your FREE Consultation https://andersonadvisors.com/strategy-session/?utm_source=conservation-easements-in-crisis&utm_medium=podcast Tax and Asset Protection Events https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=renting-out-a-property-without-an-llc&utm_medium=podcast Anderson Advisors https://andersonadvisors.com/ Toby Mathis YouTube https://www.youtube.com/@TobyMathis Toby Mathis TikTok https://www.tiktok.com/@tobymathisesq Clint Coons YouTube https://www.youtube.com/@ClintCoons

    30 min

  4. OCT 29

    Can You Deduct Tenant Damage and Cleanup Costs on Your Taxes?

    In this episode of Tax Tuesday, Anderson Advisors attorneys Eliot Thomas, Esq., and Toby Mathis, Esq., tackle a variety of listener questions related to tax deductions and property management. They discuss the implications of evicting tenants and the possibility of deducting repair costs, as well as how homeowners can deduct home office repairs. You’ll hear about  the process for amending tax returns to include rental properties and explore the tax consequences of receiving large gifts from non-U.S. citizens. Additionally, they cover topics like the advantages of S-corp versus C-corp structures, the requirements for achieving real estate professional status, and the nuances of short-term property sales, including 1031 exchanges. Tune in for expert insights that could impact your tax strategy! Submit your tax question to taxtuesday@andersonadvisors.com Highlights/Topics: "We rented our house last year due to damages caused by the tenant violations of the agreement. We evicted them." "The tenant abandoned the property with their belongings." "With proper judgment and the sheriff's help, we evicted them and cleaned the property. The tenant caused too much damage. Can we include the cost of fixing it on our taxes?" - yes, and we have two categories, repairs or improvements. "I work from home. I already take deductions for my home office. If there is a repair in the house like plumbing or an appliance repair, am I able to take a percentage of that repair off as a deduction?" - As a general matter, yes. "In 2022, I bought and rented a rental property, but I never put the property on my tax return. Can I now add this property to my tax return and take advantage of the tax deductions, cost of ownership, et cetera? Is there a limitation on how far back someone can amend a tax return or add a rental property purchase in the past?" - yes, you can. Is there a limit to how far back? Yes, I'll hit the limit first, three years from the date that you filed. "My parents live in Singapore and are not US citizens. They want to give me and my kids $200,000.”“They have not previously gifted us any funds. Will any of us need to pay tax on this?" - Generally speaking, I don't know of a tax necessarily if you have non-US citizens giving cash gifts over to their children or family. "Is there a different procedure to buy a residential multifamily with a pizzeria?" "Is there a different procedure to buy a multifamily with the pizzeria running downstairs?""We have our long-term rental properties with LLC. How should we proceed with this? Can we do a cost segregation study and take bonus depreciation on this type of property and take advantage of the passive deductions?" - For both, you can go ahead and do a cost segregation study, see if it would be in your favor—usually it is "What type of activities can I log toward REP (real estate professional) status, as a real estate agent? For example, working at home on my website, market research, advertising. Does having a home office mean my time driving to and from showings counts as time? Is education either required or optional?" - If you meet the criteria, then that turns it from passive to non-passive. if you spend over 750 hours in a particular trade or business "What are the tax consequences if I sell a property in less than a year of purchase? Does the same apply to manufactured homes? And would they be able to do a 1031 exchange if there's profit on the sale?" - What was your intent? Was it to flip? That is a different scenario than short-term gains. Manufactured homes need to look at state laws. "Why should I open an S-corp versus a C-corp?" - There are many differences to consider. "Can you please explain the 100-hour material participation in detail? You participated in the activity for more than 100 hours during the tax year, and you participated at least as much as any other individual, including individuals who didn't own any interest in the activity for the year." "For example, if I

    1h 1m

  5. OCT 23

    5 Reasons To Ditch Traditional Office Space: The Office-Free Entrepreneur

    In this episode, Toby Mathis, Esq., of Anderson Business Advisors, sits down with Mike Sullivan from Alliance Virtual Offices to discuss the evolving landscape of workspaces. Mike details five compelling reasons to abandon traditional office spaces, highlighting Alliance's impressive 40 years in the industry, with 20 years dedicated to virtual solutions. The discussion demystifies the concept of a "virtual office," likening it to the 'Airbnb' of office rentals. Listeners will learn about the array of services offered, including phone support, professional addresses, receptionists, and flexible meeting spaces—all for a budget-friendly monthly cost.   Virtual offices can mitigate risks associated with rising rent and personnel disputes, providing the flexibility needed for businesses to thrive. Ideal for those navigating talent needs or seeking cost-effectiveness, Alliance also offers rental agreements that start with a six-month minimum, transitioning to month-to-month options. Tune in to discover how virtual offices can transform your business strategy!   Highlights/Topics: Five key reasons to ditch your office space Alliance’s 40 years in the business - 20 years virtual Ambiguity – exactly what is a “virtual office”? The ‘Airbnb’ of office space Services available - phone number, operators, address, receptionist, meeting space, workspace Monthly cost of $50-$70 per month globally Rent on an as-needed basis, for example, attorneys are the largest percentage of renters Mitigating risk/credit - eliminating rising monthly rent, credit, personnel disputes or conflicts, separating business from personal Flexibility is key for hiring and cost-effectiveness Talent needs - if employees are unable to work from home Rental agreements - 6-month minimum, then month-to-month is available Utilizing space for private interviews Share this with new investors you know Resources: Alliance Virtual Offices Offer for Listeners https://www.alliancevirtualoffices.com/lp/anderson-advisors?gspk=YW5kZXJzb25hZHZpc29yczUyNDA&gsxid=YHqclhuYOPk8&pscd=ps.alliancevirtualoffices.com Schedule Your FREE Anderson Consultation https://andersonadvisors.com/strategy-session/?utm_source=5-reasons-to-ditch-traditional-office-space&utm_medium=podcast Tax and Asset Protection Events https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=5-reasons-to-ditch-traditional-office-space&utm_medium=podcast Anderson Advisors https://andersonadvisors.com/ Toby Mathis YouTube https://www.youtube.com/@TobyMathis Toby Mathis TikTok https://www.tiktok.com/@tobymathisesq

    26 min

  6. OCT 18

    Tax Strategies and Tips for Starting an Online Business

    This episode of Tax Tuesday with Anderson Advisors attorneys Eliot Thomas, Esq., and Toby Mathis, Esq., tackle pressing issues faced by business owners and real estate investors. From the implications of switching health care reimbursements from a C-corporation to an LLC, to short-term rental strategies, Eliot and Toby discuss the 100-hour participation test and how to select the right property. Other topics include the intricacies of real estate professional status, the deductibility of expenses for damaged properties, and the mechanics of Qualified Business Income (QBI) deductions. Finally, listeners learn about tax management for online businesses (at 46:17) and the potential tax liabilities of renting secondary homes through an S-corp.Submit your tax question to taxtuesday@andersonadvisors.com Highlights/Topics: "I currently reimburse myself for health care expenses through my C-corporation. I have another completely separate business that I run through an LLC registered in Wyoming. Are there any issues if I switch my health care reimbursement from the C-corp over to the LLC?" - It depends- who is it disregarded to? A C-corp can reimburse health expenses. "We want to take advantage of the short-term rental loophole strategy. If we buy a house in October and close in November, would I have enough time to reach the 100-hour test? What kind of house should we focus on?? - There are several different tests for material participation, one of them being at least 100 hours and more than anybody else. But there are 7 total tests. "Regarding real estate professional status, the code says you have to participate 500 hours materially or have been rep for the last five years." Actually, there are seven tests, but we'll get into that. "Does that mean if a spouse has been a rep for the past five years, he or she can be hands-off for the next three to five years and still claim rep to offset the other spouse's W-2?" - Long-term rentals are passive income normally, but REP status changes that, although it has certain requirements "We bought a small house. The house was in a fire and had a lot of damage. We spent a lot of money on structural engineering, services, roof, and other support of construction. This was needed for the safety of workers. They would not be able to work otherwise. My CPA told me I can't take any of those expenses as deductions because I have not rented the house yet. Please be so kind and tell me why I can't deduct structural engineering expenses of more than 12,000. My CPA told me I can only deduct utilities such as water and electricity. That's it." - The code is the code, you can’t deduct for a rental until it is in service…the write-off comes over cost seg "Can you go over QBI in detail? And do I deduct 20% QBI from net or gross profit? Also, do I deduct 20% first, then my expenses, or do I choose either 20% or my expenses?" - First you find your net, then there are five different qualifications "If I sell a house on an agreement for deed, how are the monthly payments that I receive taxed?" - If you used it as a rental, you’ll have depreciation recapture. “For deed” means you’re selling it over time. [46:17] "I'm considering starting an online business. I'd like to know strategies and how to manage taxes as best as possible."- Start by putting it in an LLC, tax it as S or C-Corp, be aware of state requirements… "Could I have my S-corp rent my secondary home when the business takes clients on retreat? While this may create an expense on the business side, does it also create a tax liability on our 1040?" - How is the second home currently being used? If it's already a rental, you may hit some limitations… "Does changing the floor and painting the walls count as repair, or is it a renovation?" - Painting is usually a repair, you can write that off. Flooring has other requirements. "Can I take a six-figure distribution from my S-corp and have it not affect my social security? If the corporation shows a

    1h 5m

  7. OCT 1

    Can You Use a 1031 Exchange for Property Flips Under One Year?

    In this episode of Tax Tuesday with Anderson Advisors attorneys Eliot Thomas, Esq., and Amanda Wynalda, Esq., we dive into essential real estate investment strategies and tax implications for property owners. Discover why selling a rental property to your LLC is considered a prohibited transaction and learn how to protect capital gains from your primary residence using the 121 exclusion. We discuss the limitations of 1031 exchanges for properties flipped within a year and outline how to determine a reasonable salary from your S-Corp while considering payroll taxes. Additionally, we clarify the requirements for maintaining real estate professional status, the treatment of capital gains within an S-Corp, and the nuances of deductions for short-term rentals. Tune in for valuable insights to optimize your investments! Submit your tax question to taxtuesday@andersonadvisors.com Highlights/Topics: I just purchased a property through a self-directed IRA and LLC. I own a rental property. Will I be able to sell the rental property to my LLC? - No, you cannot personally benefit, this is a prohibited transaction. How can I protect the capital gains from selling my primary residence after adjusting the cost basis? And after taking the 121 exclusion and utilizing that money for investment purposes. - If the home was used as a personal residence for two of the last five years, you might be able to take some money off - it's 250,000 if you're single, 500,000 married filing joint. Can I use the 1031 exchange when flipping properties under one year of ownership? - The IRS looks at the property as “inventory.” So although it is being used in a ‘trade or business’ you can’t use the 1031. How do you determine the right pay for yourself? Is it worth the taxes you pay into Medicare and Social Security? So far, we've paid $30,000 in payroll taxes. Will that go towards our tax bill at the end of the year? - You have a ‘reasonable salary requirement’ from an S-Corp. It ranges from 38% to 60%. What minimum must you do to maintain your real estate professional status and not be considered a dealer if you intend to flip a house? - REP status is when you spend 50% of your personal services time and at least 750 hours in your real estate trade or business. What happens with the capital gain from stocks or from the sale of a rental property when inside of an S-Corp? - It is not ‘ordinary income’- the building is under “separately stated”. What is the list of deductions with a STR that's a short-term rental for those of you in the know in the REI, as passive income when material participation is not met compared to a list of deductions when material participation is met? - There is no difference between passive and non-passive deductions. Google IRS PDF Schedule E. If I volunteer my work or time at a nonprofit, is this tax-deductible? - the short answer is no, but you can deduct things like mileage I have a W-2 and 1099 income. Bought a house to flip. How can I best take advantage of this financially to save on tax? - you may be able to run certain deductions against your income. How does rental property via an LLC affect personal taxes? - we get this question all the time recently. Set up in a disregarded LLC, no impact at all on your personal taxes. Resources: Schedule Your FREE Consultation https://andersonadvisors.com/ss/ Tax and Asset Protection Events https://andersonadvisors.com/live-tax-and-asset-protection-workshops/ Anderson Advisors https://andersonadvisors.com/

    51 min

  8. SEP 24

    1031 Exchange for Real Estate Investors (HUGE TAX SAVINGS!)

    Today Clint Coons, Esq., speaks with Aaron Kancevicius, the Lead 1031 Advisor/Director of Lending at Plenti Financial. Aaron takes us through the ins and outs of navigating the IRS’ 1031 exchange guidelines for investment properties. Aaron and Clint discuss the essentials of setting up a 1031 exchange, the importance of consulting with a CPA, and the necessity of a qualified intermediary. Aaron clarifies the complexities of depreciation, depreciation recapture, and the "like-kind" property rule. He outlines the critical timelines, including the 45-day identification and 180-day closing periods, offering tips for effective portfolio diversification. Additionally, you’ll hear advanced strategies like standard and reverse exchanges and transitioning properties to personal residences, making this episode invaluable for serious real estate investors.Aaron Kancevicius is from Plenti Financial, a leading 1031 exchange consulting firm in Southern California with over 20 years of experience in real estate finance. Aaron has helped countless real estate investors evaluate deals from as little as $100K to over $100 million. Highlights/Topics: Clint’s introduction of guest Aaron Kancevicius How you can arrange for a 1031 exchange When in the process do you need to apply for a 1031? Debt, loans, timing Parameters for avoiding capital gains taxes Are there complications with cost segs on properties? Complexities of the “Like/Kind” IRS regulation Diversifying with a 1031, limitations Working with contractors on improvements Related party transactions Cash-out refi’s Considering exchanges from US to International Drop-n-Swaps, reverse exchanges, selling multiple properties, combo exchanges Can you use a 1031 to purchase a primary residence vs. an investment properties? Other uncommon situations, mistakes Aaron has witnessed Closing comments - contact an expert before you embark on a 1031 exchange Resources: Plenti Financial https://www.startmyexchange.com/anderson Schedule Your FREE Consultation https://andersonadvisors.com/strategy-session/?utm_source=1031-exchange-for-real-estate-Investors-HUGE-TAX-SAVINGS&utm_medium=podcast Tax and Asset Protection Events https://andersonadvisors.com/live-tax-and-asset-protection-workshops/ Anderson Advisors https://andersonadvisors.com/ Anderson Advisors Podcast https://andersonadvisors.com/podcast/ Clint Coons YouTube https://www.youtube.com/channel/UC5GX-U6VbvMkhSM1ONBiW8w

    48 min
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Real Estate Investors, Stock Traders, and Business Owners guide to preserve their wealth, protect their assets, and prosper in the future. Anderson Business Advisors' Attorneys and Professional Advisors share tax reduction strategies and asset protection techniques to protect and build your wealth.

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