My largest client at a previous firm was an incredible learning experience. The type of stuff you can only learn by being so close to big mistakes. The next few editions, I'm going to walk through the technical lessons I learned - which will help explain how we got them out of $40 million of interest and penalties, including a call with Chief Counsel (big dogs at the IRS) who convinced us not to file a PLR because it would set precedent they didn't want set. ๐บ Advertisement ๐บ I've read...
14 days agoย โขย 5 min read
Having the pain threshold to read an Operating Agreement (or LLC Agreement, or Partnership Agreement - same thing) is a powerful tool. But knowing what's missing from the agreement is where you can provide incredible value to your investors, clients, or yourself. Today, we're going into one of my favorite topics - the Operating Agreement (OA)'s impact on the tax return. I'll cover some commonly misused terms, misapplied terms, and missing terms. ๐ต๐ซ ๐จ But before we go on - time to pay for this...
21 days agoย โขย 6 min read
"Life get's complicated when you use other people's money to make money." Today, we're jamming on a wrinkle that tax preparers will often come across in real estate - using a Tenancy in Common (TIC) structure to keep a ยง1031 like-kind exchange in tact. ๐๏ธ โก๏ธ ๐ I've done another post on TICs and their restrictions previously here - so today will be more theory. What's a TIC The best way to think about a TIC is that's it's like a Joint Venture (JV) for real estate. ๐ค They are a workaround to a...
28 days agoย โขย 3 min read
There are a handful of areas in the tax world that business owners usually push the envelope on. One of them is "what states do we have to file in?" And while the answer isn't always clear at first, it is pretty black and white with enough research. ๐ท This same bent usually also gets applied to indirect taxes - like sales tax, use tax, and excise tax. While growing, business owners want to file in as little jurisdictions and pay as little indirect tax as possible - even if it means they're in...
about 1 month agoย โขย 4 min read
"You will spend your 50s and 60s unwinding what you set-up in your 30s and 40s" - or so goes the popular tax adage. ๐งต Peaking in earning too young has a way of making you paranoid of tax. The aggressiveness that brings early success will often bleed into tax structuring - being willing to take positions to mitigate as much tax as possible. And many (often good) advisors and attorneys won't warn you against these structures because they're lucrative for them too. So you get a whole lot of...
about 1 month agoย โขย 3 min read
"Can you send me one of your balance sheet tracker schedules? Nothing fancy - just like us old dogs used to use." One of my clients just hired a new Controller and this was the first email he sent to me. Had to think for a second, then realized what he was asking for. "You mean a rollforward? Here's a quick one I just put together - let me know if that works," I shot back. "Hell yea - that's perfect!" was the reply. Today, we're going to jam on what I sent him ๐ฅ - and how knowing about...
about 2 months agoย โขย 4 min read
About 10 years ago, I began a daily habit of logging on to the US Tax Court website at 3pm and looking for that day's Tax Court decisions. ๐ I look every weekday whether I'm traveling, on vacation, or deep in busy season. It's wild the amount of tax alpha (and tea ๐ต) that gets posted for free. ๐
After a while, some recurring themes standout - tax positions that get challenged consistently. And the best ones are when the IRS loses their case and the taxpayer wins. Today, we're looking at 5...
about 2 months agoย โขย 5 min read
A few weeks ago, I talked to a real estate developer who is looking at a $200 million exit. He was set to close in 6 weeks and was interviewing CPAs to help him mitigate his tax bill ๐คฆ. I was second on the list after a lady calling herself Tax Goddess - which I wasn't sure how to take, honestly. But I'll share here what I told him on that call - tax planning for a sale of a business is best done in three phases: Before the Sale During the Sale After the Sale Let's dive in. Obvious caveats...
2 months agoย โขย 5 min read
This ๐ is an incredible post from last year by one of my favorite RETwit accounts, Bethany. And one that proves the point that being able to read a general ledger is a superpower not reserved just for accountants. Source: Bethany's X account There's a reason that getting the general ledger is one of the most powerful components of due diligence - it tells you both sides of every transaction recorded for that year. And it can help you see things that you'll miss just looking at the financials....
2 months agoย โขย 4 min read