Today we will be taking a pretty deep dive into an ownership structure common in real estate - the Tenancy in Common, or TIC. ๐ข This may be overly deep if you don't care about real estate tax structuring - but it's exactly the thing I nerd out ๐ฅธ about and enjoy so it's what you get today! Below, we'll talk about: What a TIC is and how it's used ๐คทโ๏ธ What are the (lesser-known) rules to run a TIC for tax compliance ๐ What does tax filing look like for TIC and TIC owners ๐ ๐จ Before we dive too...
12 days agoย โขย 5 min read
Every Cash Flow Statement I've seen from an accounting software sucks (looking at you, QBO)๐ฟ. It's a shame because the Statement of Cash Flows (SCF) is one of the most practical financial statements to really understand the health of a business. ๐ฉบ If you read the breakdowns of the downfall of Enron, the SCF and related party disclosures were throwing red flags ๐ฉ years before it all came down. So what is the SCF and how can you use it? Let's dig in ๐ I created the meme above to demonstrate how...
19 days agoย โขย 4 min read
๐ง Before we jump in - be sure to listen to Today in Tax Court: Gregory v. Helvering. It's the newest episode and I cover this landmark case on entity structure and business purpose doctrine. ๐ง Episode 6 - Gregory v. Helve... Jan 9 ยท Today in Tax Court 24:28 If you've been following me for a while, you'll know I preach that a core input of entity selection is what the balance sheet will look like. In general, you do not put appreciating assets in a S-Corp without very good reason. ๐
โ๏ธ That...
26 days agoย โขย 4 min read
One of the first questions to answer when advising entity selection is how the business will be capitalized. ๐ฐ Whether you should run your operations as a S-Corp, C-Corp, or Partnership depends heavily on: What kind of investors will you have (if any), and ๐จ๐ฉ๐ง๐ฆ Will you have significant liabilities (debt) to run the business ๐ฆ We'll be focusing mainly on the second bullet point today - more specifically the tax impacts that being a partnership versus a S-Corp has on the ability to "access"...
about 1 month agoย โขย 3 min read
If you've followed me for long, you'll know I'm a big advocate for partnerships as a tax entity structure. S-Corps and C-Corps have their roles, but I see them misused more than you'd imagine. They trap appreciation of assets ๐ชค with sometimes next to no benefit in return. But there's another less-known reason to use a partnership for tax purposes - the ability to deduct unreimbursable expenses. ๐ "Unreimburseable Expenses" Usually, things like travel, meals, or other out of pocket ๐ costs are...
about 1 month agoย โขย 2 min read
A happy LP can be your biggest advocate. But as much of the Twitter / X saw, angry LPs can also be a pretty big threat. And that spectrum is of happy / angry is all based on one thing: LP expectations. ๐ซด How the LP expects the asset to perform ๐ข, how they expect distributions ๐ต to work, what they expect the K1 ๐ to look like - all these impact their mood from month to month and year to year. Many of these things are conditional based on the market - but not all. To control what you can,...
about 2 months agoย โขย 4 min read
I recently blasted out a 30+ tweet thread about various tax maxims: Roger Ledbetter | RE & SMB CPA @rledbetterCPA A ๐งต of tax maxims: 10:51 AM โข Nov 29, 2024 8 Retweets 91 Likes Read 9 replies The one I feel most strongly about is that the balance sheet is where the dead bodies are buried. More fraud has been committed on the balance sheet than the income statement ๐ฑ - it's the only way to move the needle without moving cash. Today, I'll walk through a few examples of how a balance sheet can...
about 2 months agoย โขย 4 min read
[Before we get into the weeds - I've released a new podcast covering Top Tax Court Cases for 2024. If you enjoy my posts on tax court cases, you should take a listen. Would appreciate any feedback and support. You can find it on Spotify and Apple Podcasts - "Today in Tax Court".] Over the last 16+ years in public accounting, one thing has remained true. There are a surprising number of business owners that despise sending money to the federal government. ๐คฌ And while spending $1 to save 40ยข is...
2 months agoย โขย 4 min read
The most flexible type of entity, from a federal tax angle, is the LLC. ๐งโ๏ธ The LLC is a shape-shifter of business types, which is great for a lot of different reasons. But it's not so great when it's not respected. โ When an LLC is going to be used as an S-Corp with multiple owners, there is an extra layer ๐ฐ of attention that must be paid to the LLC Operating Agreement (OA). Disregarding the OA language can result in a busted S-election and a C-Corp with years of back taxes. ๐ค When this...
2 months agoย โขย 3 min read