Calls with prospective clients often turn into "show me what you got" contests. But tax strategy doesn't work like that... It's a multi-phase process of decision making. Before we name a single strategy, we have to answer three questions about you. The answers decide which moves are on the table and which are noise. And this process compounds with time - as we learn your tendencies, goals, and risk appetite. And with our selling season picking up steam, I wanted to share how we think about...
12 days agoย โขย 5 min read
I met with a young business owner this week - one of his questions is the most common ones I get asked all the time. "I took out $150,000 from my business, so I'm going to have to pay tax on that right?" The answer in his case was, "you already have." He stared blankly back at me and we ran through this concept ๐ When a Distribution is Taxable If you own a "pass-through" business (you get a K1, or are a sole proprietor) then you get taxed income of the business whether you take out a...
19 days agoย โขย 4 min read
The best attorneys are specialists - ideally at keeping you out of trouble. This specialization mostly comes in the form of transaction structuring, risk identification, or legal procedures. A few of them have taken a wrong turn and wound up as tax attorneys. But of those few, even fewer have ever filed a tax return or allocated income and loss on K1s. Which is a shame because that's an experience that is sorely needed when drawing up operating agreements. I've been reviewing operating...
26 days agoย โขย 5 min read
3 years. Now on to the memes. ๐ Only kidding. Obviously there's a lot of nuance to this question I get several times a year (albeit less often with the real estate market being where it is now). Let's look at the factors that impact to Cost Seg or not to Cost Seg: Covering the Obvious - Recapture The primary argument against cost segregation studies is "depreciation recapture." ๐ฑ Most of my readers are likely real estate literate and understand the concept, but just quickly for those...
about 1 month agoย โขย 4 min read
Most buyers treat accounting as the cost of keeping score. You close on a business or a property, you hand the books to a bookkeeper, and you check back at tax time. The accounting department becomes a compliance expense. A necessary evil. Overhead. That framing costs you real money. Done right, the accounting function in a newly acquired business or property is one of the highest-ROI investments you'll make in the first year of ownership. It finds revenue you're entitled to but never billed....
about 1 month agoย โขย 7 min read
IRC ยง267 disallows losses on sales between related parties. ๐ช For older clients sitting on lower value real estate and corresponding capital losses they will never use, ยง267 has a quieter feature that can move real money to the next generation. This is especially interesting for those subject to estate tax (estate values > $30 million). ๐ฆ The feature is the "ยง267(d) offset." When a related-party loss is disallowed, it does not vanish. ๐จ It attaches to the property in the buyer's hands. If the...
about 2 months agoย โขย 5 min read
If you own a business with at least one other person, you have a document that governs how your business runs. Operating Agreement, Partnership Agreement, Shareholder Agreement - all driving the same things: Who can make decisions What happens when things go bad Who gets money when there is money to distribute How does it all get wound up For too many small businesses and real estate GPs, the agreement comes from their attorney and the attorney focuses on the things they're good at - risk....
about 2 months agoย โขย 6 min read
Tax is hard. Making money doing taxes for others is even harder. That's usually the main driver for the mistakes I find on returns I look at for prospects. Most CPAs understand these basic things, like what we're talking about today - Basis, but they're trying to run a business. And quality is very difficult to scale. So how can you spot check the K1s you get (or prepare) on a partnership return? And what happens if you get it wrong? Glad you asked. ๐ค Why Basis Matters Basis in a partnership...
2 months agoย โขย 3 min read
If you were charged penalty and interest for taxes at any point between January 2020 and July 2023, there is a chance the IRS over-assessed and owes you money back, at least for now. ๐ A late-2025 federal court ruling held that the COVID-19 disaster declaration automatically postponed federal tax deadlines for that entire 42-month stretch, and any late-filing penalty, late-payment penalty, or underpayment interest the IRS computed using a "due date" inside that window is potentially...
2 months agoย โขย 3 min read