The Achilles Heel ๐ฆถ of small business tax decision-making is good accounting. This time of year, we get on calls with our clients and talk about what the year looked like, how much tax they'll owe in the next 12 months, and what they need to do before the end of the year. Those are the right topics - but the business income can often be a big moving target. And if that number was bad when we did planning, it will make our tax estimates equally bad. Today, we're jamming on what you should do...
8 days agoย โขย 4 min read
You've decided to enter the wonderful world of private business and/or real estate investing. You send your CPA an email, being the proactive client you are, and let him know the wire is going out. But before you send the money, are there any tax-related things to be aware of? The CPAs response? "Nope - you're a passive investor, so not really much to do on your side." Or maybe you get ignored - 50/50 shot from what I hear. ๐คทโ๏ธ But the right answer isn't actually that simple. It's just that...
15 days agoย โขย 4 min read
Next week I'm flying out west to talk about Operating Agreements to a bunch of real estate GPs and investors at Reconvene. I could not be more excited to jam for even 45 minutes on a topic so near and dear to my heart. ๐ซถ Every year I read dozens of new operating agreements - and I see a handful of errors or tax misses that I'm going to share with that audience. But I didn't want to leave you guys out - so I have something exciting to share here. I've found a treasure trove of publicly...
22 days agoย โขย 4 min read
Real estate is special. Every time a new tax law comes out meant to raise federal revenue, real estate somehow gets a way out. We see it in the passive loss exceptions, the reduced rate on depreciation recapture, like-kind exchanges, the at-risk limitation, interest limitation carve-outs, and the carried interest exception. All real revenue raisers - just not from real estate pros. ๐ทโ๏ธ The government has a special place in its heart for developers and investors - for good reason. Capital...
29 days agoย โขย 4 min read
Every year I talk to dozens of business owners who want to change CPAs. Their current guy isn't future-oriented enough for them - doesn't bring them ideas or strategies. I share our strategies page on our website and then ask them about their 3 year forecast for their business. Guess how many have one. I can't think about your business future more than you do. ๐ฎ I can't bring you strategies that don't belong in your tax plan. So the right place to start in strategic tax planning is getting...
about 1 month agoย โขย 6 min read
Modeling how much cash you'll keep AFTER paying taxes is wildly underrated. You assume it's 20% on real estate but what if it's not. And when you're doing math on multiple millions, a 3.8% tax can move the needle quickly. On a $5,000,000 exit, that's $190,000 of extra tax burn. Today, we're talking about a favorite topic of mine - how to avoid the net investment income tax (NIIT). โคต๏ธ What is NIIT Essentially it's a 3.8% tax on passive income. It was rolled out to help fund the Affordable Care...
about 1 month agoย โขย 4 min read
I spend a lot of time thinking about tax strategy for small business and real estate. So much so we've devoted an entire page on our website to "how we think about strategy" - a free tool anyone can use to see what they may be missing. That tool, while a great staring point, is incomplete if you're trying to get tax-smart. Someone still needs to run point on implementation, point out the hidden traps, and reassess. One of the most important steps to implementation is setting priorities....
about 2 months agoย โขย 7 min read
Basis is expensive. So one of the ways to reduce that expense is to use that basis to reduce your income tax drag on other income. And for those that invest in or own real estate, you can accelerate the tax benefits of a lot of smaller components of that basis using a cost segregation study. But the cost seg is just one part of a larger strategy to actually be able to use that benefit to it's fullest potential. ๐ Today, we're jamming on a few of the ways I've seen people get disappointed in...
about 2 months agoย โขย 5 min read
We just finished a group of returns for a new client we onboarded last year and all-in got about $400k of tax back in his pocket with a few changes we identified. It's a big win ๐ for him and us - so wanted to share what we did. The Meeting and Review All of our new clients get their prior returns reviewed as a part of onboarding - and even prior to that to confirm scope. But after a chat with this client, we determined he was a good fit for a deeper dive - a tax gameplan we do where we look...
2 months agoย โขย 4 min read