Mike Butler has the flu or worse on this one. His voice is about gone. Great information for cash flow, tips and more. Click Here for Full Video/Article (Members Only)
from J. Michael Grinnan CPA
Your First Look at Year-End Tax Planning
The approach of year-end 2015 makes it tax planning season. Tax law developments in 2015 can affect, for example, the deduction of costs and expenses, the treatment of contributions to tax-favored accounts, and the inclusion of certain benefits in income. Traditional year-end planning techniques for investments and retirement are also important. Small businesses also have some tools for year-end tax planning. Although it may seem early to contemplate year-end planning, the remaining weeks of 2015 will pass quickly and taxpayers need to be proactive.
Taking inventory of gains and losses at this time to map out a year-end buy, sell or hold strategy later makes particular sense. Investors should note that immediate losses in the stock markets do not necessarily translate into tax losses. The fact that assets purchased several years ago may still yield taxable gains because of low basis, and the existence of the wash sale rule if a stock is purchased within 30 days before or after a sale, should be considered in assessing current tax positions.
Taxpayers should also remember the higher tax rate environment that is now in its third year. Not only has the top rate jumped to 39.6 percent for ordinary income (and short-term capital gains) but the rate for long-term capital gains and qualified dividends has increased from 15 to 20 percent. Furthermore, a 3.8 percent net investment tax applies to taxpayers with income above a non-inflation-adjusted threshold ($250,000 for married taxpayers filing jointly; $125,000 for married taxpayers filing separately; and $200,000 for all other taxpayers).
Saving for retirement
Although most IRA contributions for a particular year may be made until the filing date for that year, other deadlines are at year end, such as contributions to 401(k) plans and Roth conversions and re-conversions. Required minimum distributions for retirees and those over age 70 ½ also generally carry a year-end distribution date beyond which a penalty applies. One exception allows an individual turning age 70 ½ to delay starting distributions until April 1 of the year following the year in which the individual turns 70 ½.
Many small businesses have relied on the generous Section 179 deduction, which is now up for renewal as part of the extenders legislation, to gain an immediate write-off for equipment, rather than follow depreciation schedules. One alternative now available to many businesses is the de minimis safe harbor threshold amount under the final so-called “repair regs.” Currently, a de minimis safe harbor under the repair regulations allows taxpayers to deduct certain items cost $5,000 or less (per item or invoice) and that are deductible in accordance with the company’s accounting policy reflected on their applicable financial statement (AFS). IRS regulations also provide a $500 de minimis safe harbor threshold for taxpayers without an applicable financial statement.
New tax laws
So far this year, Congress has passed and President Obama has signed several tax bills. Two new laws impact tax planning for public safety officers. The Don’t Tax Our Fallen Public Safety Heroes Act clarifies that both federal and state benefits for public safety officers fallen or injured in the line of duty are treated the same in the tax code and are not taxable. The Defending Public Safety Employees’ Retirement Act affects retirement planning. Generally, taxpayers who receive an early distribution from a qualified retirement plan are subject to a 10 percent penalty, unless an exemption exists. The Defending Public Safety Employees’ Retirement Act expands the exemption to include certain federal law enforcement officers, federal firefighters, customs and border protection officers, and air traffic controllers.
Late last year, Congress passed the legislation creating A Better Life Experience (ABLE) accounts. States are now enacting enabling legislations, which along with federal law, will allow ABLE accounts to be set up for qualified individuals with disabilities (who became disabled before age 26) for tax years beginning after December 31, 2014. Contributions in a total amount up to the annual gift tax exclusion amount, currently $14,000, can be made to an ABLE account on an annual basis, and distributions are tax-free if used to pay qualified disability expense
One bill that has not yet passed is legislation to extend the so-called tax extenders. The Tax Increase Prevention Act of 2014 (TIPA) only extended these popular but temporary tax breaks for 2014. The expired extenders include the state and local sales tax deduction, higher education tuition deduction, transit benefits parity, research tax credit, the work opportunity tax credit, and many others. The extenders are likely to be renewed for 2015 but Congress may wait till December to pass a bill. Our office will keep you posted of developments.
If you have any questions about year-end tax planning, please contact our office. We can develop a personalized year-end tax planning strategy.
BEST Screening tool for Landlords: Housekeeping Check
After working up their application on paper and on the phone – get out of the office!
Ride by and see where they live. If it is ugly, tall grass, cars in the yard, no need to stop. If it looks okay from the street, then stop and knock on the door.
You MUST verify they actually live in this pretty home.
I explain my company sent me over and it is one of the final steps in their application process.
This almost final step is “Our way of verifying you live here and to see how you take care of your home.”
If you feel safe enough to eat a bologna sandwich then it looks like you might have found a good tenant. Many times I have stopped by and knocked on the door only to discover the applicant does not live there but is a relative or friend who asked for a favor.
#1 BEST SCREENING TOOL! – “HOUSEKEEPING CHECK”
Managing tenants effectively builds our wealth and begins with screening tenants properly when they submit an application. Most landlords use applications for a fee. My objective here is to give you a smorgasbord of screening tips allowing you to select items of your choice to work into your system.
Application: first of all, make sure your application is proper and legal and does not violate any fair housing laws or local laws. On the back, include a section with a few lines allowing the applicant a place to write comments. Also include a small section of text briefly detailing your qualifying standards and permission for the landlord to check all sources in evaluating their application for tenancy. Also include a phrase stating an “false or incomplete application” is a reason to be disqualified or not approved. Their signature line is below this small bit of text. Click Here for Full Video/Article (Members Only)
National REIA Applauds US District Court Ruling Upholding Fourth Amendment that Protects Property Owners from Unnecessary Gov’t Harassment
Cincinnati, Ohio) The National Real Estate Investors Association (National REIA) issued a statement today applauding the U.S. District Court’s (Southern Ohio) recent decision stating that the city of Portsmouth’s (Ohio) occupational licensing requirements, which are imposed upon landlords violates the Fourth Amendment to the United State Constitution.
Charles Tassell, Chief Operating Officer of National REIA said “Today’s ruling laid bare the excuses used by local governments to steal the freedoms of property owners.”
He further added that “The 4th Amendment is still alive and well, and citizens should NOT be forced to have their homes intrusively ‘inspected’ by warrantless searches. Every local government should take note that warrantless searches are STILL illegal and unconstitutional.”
Regarding the ruling itself, Tassell said “The ruling won by the 1851 Center For Constitutional Law was a victory for freedom against a tyranny with which the Founding Fathers were all too familiar. Citizens of the United States have an expectation to live without local, state or federal inspection of their home based on flimsy excuses disguised as law.”
Judge Susan Dlott, of the Western Division of the Southern District of Ohio, held as follows: “[T]he Court finds that the Portsmouth [Rental Dwelling Code] violates the Fourth Amendment insofar as it authorizes warrantless administrative inspections. It is undisputed that the [Rental Dwelling Code] affords no warrant procedure or other mechanism for precompliance review . . . the owners and/or tenants of rental properties in Portsmouth are thus faced with the choice of consenting to the warrantless inspection or facing criminal charges, a result the Supreme Court has expressly disavowed under the Fourth Amendment.”
For more information and to read a copy of the the Court’s ruling visit www.realestateinvestingtoday.
September 3, 2015 4:49PM
Fannie Mae announced that it is increasing the maximum number of allowable days for “routine” foreclosure proceedings for much of the country.
In total, Fannie Mae increased the maximum number of allowable days for a foreclosure sale for 33 states, effective for foreclosure sales on or after Aug. 1.
Fannie Mae made the announcement Thursday in an email to its servicers.
According to the announcement, Fannie Mae increased the maximum number of allowable days for the following jurisdictions: Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Nevada, New Mexico, New Hampshire, Oklahoma, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Dakota, Tennessee, Texas, Vermont, Washington, West Virginia, Wisconsin, and Wyoming.
As part of its servicing guide, Fannie Mae establishes time frames under which it expects routine foreclosure proceedings to be completed.
According to Fannie Mae, the maximum number of allowable days takes represents the maximum allowable time lapse between the due date of the last paid installment and the completion of the foreclosure sale.
The allowable time frame also signifies the time typically required for what Fannie Mae calls a “routine, uncontested” foreclosure proceeding.
The allowable time frame reflects the legal requirements of the applicable jurisdiction, and takes into consideration delays that may occur outside of the control of the servicer, Fannie Mae said.
If the number of days to complete a foreclosure sale exceeds stated maximum number of allowable days and the servicer does not provide an adequate explanation to Fannie Mae as to the reasons for the delay, Fannie Mae requires the servicer to pay a “compensatory fee.”
According to Fannie Mae, the list of “reasonable explanations” includes:
- Military indulgence
- Contested foreclosure
- The mortgage loan is currently in review for HAMP
- The mortgage loan is in an active mortgage loan modification trial plan or unemployment forbearance
- Recent legislative, administrative, or judicial changes to existing state foreclosure laws, provided that the servicer is diligently working toward resolution of the delay to the extent feasible
Fannie Mae noted in its announcement that there is currently a compensatory fee moratorium for Washington D.C., Massachusetts, New York and New Jersey and stated that the moratorium will last, “at a minimum,” until Dec. 31.
Hey Mike I hope you & your family are ready for the Holidays
I purchased you Landlord on Auto Pilot course great stuff & have used it on
all my rentals with much success.
not sure how you did this John, but the date is Dec 14, 2014 – i guess it was hung up in cyber space somewhere
Ran across a new renter they are very interested in my new home.
He ask if I would consider corporate lease.
He said his company would pay for his rent monthly or give him the money to
I looked through your course & did not see anything on how to handle
ANSWER: I have done a boatload of these with companies and especially insurance companies when their victim needs housing from a fire, tree smashing, tornado or whatever.
All you do john, is put the company name as the TENANT, because they are the responsible party, and list the occupants as occupants.
#2 way to do it, is to list occupants as tenants and company as “Co-Signer”
either way will work
This is a single family rental house for residential use, not a commercial property.
Therefore, use the residential lease.
Therefore, use the residential lease.
1. Does the tenant fill out… Click Here for Full Video/Article (Members Only)
Can an S corporation own an interest in another business entity?
An S corporation may own an interest in another business entity.
An S corporation can be a member of an affiliated group by owning 80 percent or more of the stock of a C corporation. The group then can elect to file on a consolidated basis, if other affiliated group rules are met. But the S corporation itself cannot join the consolidated group.
Although in general only individuals can be shareholders in an S corporation, an S corporation can own an S corporation if the subsidiary corporation would otherwise qualify as an S corporation if the parent’s shareholders held the subsidiary’s shares directly, and the taxpayer elects qualified S corporation status for the subsidiary.
Generally, for federal tax purposes a corporation that is a qualified S corporation subsidiary is not treated as a separate corporation, and all assets, liabilities, and items of income, deduction, and credit of a qualified S corporation subsidiary are treated as assets, liabilities, and items of income, deduction, and credit of the S corporation.
An S corporation can also be a partner in a partnership or a member of an LLC.
Bigger Pockets and Brandon Turner hit another home run!!
Making the Bigger Pockets “7 Top Business Books To Help You Put Vital Systems In Place” is like winning an Oscar or an Emmy! Thank You again.
I want to share this award celebration with you – the next 100 Investors who buy my book “Landlording On AutoPilot” will get two THREE FREE Bonuses: (already got my book, then buy as a gift for special person)
BONUS 1: a brand new form, not in my book, named the “Animal Application Form”
BONUS 2: “159 Point Rent Ready Checklist”
BONUS 3: “How I Bought 50 Houses in a Year While Working My Full Time Job” mp3 audio, (keep in mind, I started with less than $1,000 in my savings account and I have never gone to a bank to buy an investment property.)
To Your Continued $uccess,
P.S. you can call Eric at 502-655-1966 to order as well
A federal judge in Brooklyn explained in a court memo released on Wednesday why he rejected a landlord’s attempt to use a child’s Hispanic ethnicity to argue for reduced damages in a lead poisoning case.
Judge Jack B. Weinstein ruled that the attempt violated federal law governing the use of statistical generalizations based on race or ethnicity, and forbid experts on both sides to discuss them.
A lawyer for Mark Kimpson, the landlord, was seeking to reduce the $2 million in damages awarded to the child and his mother after she sued over lead poisoning.
A jury awarded the damages on July 10 after finding that the apartment the family rented from Mr. Kimpson contained lead-based paint that had not been properly removed or contained.
“Posed is the question,” Judge Weinstein wrote, “can statistics based on the ethnicity (in this case, ‘Hispanic’) of a child be relied upon to find a reduced likelihood of his obtaining higher education, resulting in reduced damages in a tort case? The answer is no.”
To contest the damages, Mr. Kimpson’s lawyer, Roger V. Archibold, needed to persuade the court that the boy’s prospects for attending college and earning a degree if he had not had lead poisoning were already low. Mr. Archibold argued that because Hispanics are less likely to attend college, the boy’s chances for doing so were improbable.
In a 52-page memo, Judge Weinstein wrote that he rejected the argument based on a case in which the use of race- and ethnicity-based statistics was found to be in violation of the Constitution’s equal protection and due process clauses.
The memo on Wednesday does not affect the jury verdict, which Mr. Archibold has appealed to the Court of Appeals for the Second Circuit.
Mr. Archibold said Judge Weinstein had “mischaracterized” the defense’s argument about the child’s ethnicity. Mr. Archibold said he was confronting an expert hired by the plaintiffs whose statements at the trial did not seem to line up with the study he was citing.
“The expert was confronted with the evidence of the study that he quoted,” he said. “He opined that the study gave him these statistics and it did not.”
Judge Weinstein added that Mr. Archibold was required to use specific characteristics of the child and his family, rather than the characterization of the child as a member of a particular ethnic group, in projecting damages. The boy’s father has a bachelor’s degree and his mother has a Master of Fine Arts. Both held responsible income-generating jobs, the family was stable, and the parents were caring, Judge Weinstein said.
“Based upon his specific family background, had the child not been injured, there was a high probability of superior educational attainment and corresponding high earnings,” Judge Weinstein wrote. “Treated by experts as a ‘Hispanic,’ his potential, based on the education and income of ‘average “Hispanics” in the United States,’ was relatively low.”
The boy’s mother, Niki Hernandez-Adams, rented a basement apartment from Mr. Kimpson in an old building at 490 MacDonough Street in Bedford-Stuyvesant, where she lived while pregnant and after the boy turned 1.
During a visit to the pediatrician after his first birthday, the boy was found to have elevated levels of lead in his blood. Ms. Hernandez-Adams claimed in her lawsuit that the lead poisoning had damaged the boy’s central nervous system.
Mr. Archibold argued that Mr. Kimpson had sufficiently contained the hazardous lead-based paint in the apartment. Before the family moved in, the landlord had covered the old paint with new paint and drywall, according to the judge’s memo.
Mr. Archibold blamed the family’s dog for severely scratching the walls and the moldings in the apartment, releasing lead dust. He also claimed that the infant’s cognitive and behavioral difficulties resulted from other medical conditions of his mother during her pregnancy.
Thursday, December 14, 11:56 am
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