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Taxes / 401K to hold a trust?
« Last post by Frugalbeach on Today at 12:07:26 PM »
Hi all,
     I have a curious question, which so far, I haven't been able to find a definite answer to.  I am researching an investment in a small trust which would be held in a 401K account.
     The trust is setup like a REIT; all the income from the trust is distributed to shareholders who are responsible for the taxes due.  The distributions are historically quite high as a percentage of investment.  The fly in the ointment is that unit/shareholders are responsible for Louisiana state taxes, their home state taxes and federal income taxes.  You are allowed a depletion allowance which softens the blow somewhat.
      What I'm thinking is if you held the shares in a 401K account you would be able to bypass the tax hit.  So far my research on Google is all over the map, with answers from maybe, to definitely not.  Obviously, I'm skeptical that the IRS would let this 'loophole' even exist.  I guess I'm looking for any guidance anyone could offer.
     Thanks for any input.
General Discussion / Re: Selling house-capital gains tax?
« Last post by KeithTax on September 12, 2017, 12:38:53 PM »
KMB, The 2 out of 5 year rule to exclude $250,000 per person does not require you owned the property during the same time frame. The tax questions is: Did you LIVE there as your PRIMARY RESIDENCE 2 of the last 5 years.
Entrepreneurship / Re: Multiple Side Gigs- accounting and tax help
« Last post by Womac on September 11, 2017, 01:31:30 AM »
I think you're right M.
General Discussion / Re: Selling house-capital gains tax?
« Last post by KMB on September 06, 2017, 03:11:31 PM »
Hi Keith, another question with the same topic.

I built some condominiums and have been living in one since November of 2015. I left this condo in my LLC's name until May of 2016, then switched it into my personal name (and my wife's. I was the only owner of the LLC) to avoid the non-homestead penalty. I am planning on moving in November of 2017 and taking the full capital gain exception. Is this OK? I'm looking at an enormous cap gain that I'd really, really like to avoid...

Thanks and I am LOVING your blog!
Real Estate / Re: Forming an LLC to Manage Real Estate
« Last post by Tim on August 22, 2017, 11:13:23 AM »
Since it would have been my spouse managing the company new "Management" company, I would have said it would offer services to other landlords; however, it appears I got ahead of her interest in managing any more properties that the two of ours that she manages for us already as owner.

Anyway, thanks Maccountant, you actually addressed my original question very clearly. Absent bringing in additional property management accounts, it does not look like this is a good idea given the "reasonable fee" restrictions and self-employment income tax issues.
Entrepreneurship / Creating an LLC with Multiple Lines of Business
« Last post by SideHustler on August 08, 2017, 02:38:06 PM »
When creating one LLC to cover multiple lines of business (similar to MMM which includes construction, online publishing revenue, and whatever else suits him), how do you determine which "Principal Business or Professional Activity Code" to use when filing? Assume this LLC is a sole proprietorship, not using S-corp election.

My LLC will include various activities such as "Office administrative services" (561110) and "Independent artists, writers, & performers" (711310), with potential to also include "Other information services" including news syndicates & libraries, Internet publishing <blog revenue & YouTube channel> & broadcasting (519110).

I'm not concerned about cross-liability since each of the revenue streams will be relatively small (under 5 figures annually). Since the portion of each revenue stream will likely vary year to year (in the beginning it will primarily be "Office administrative services" (B2B), then morph more into performing/publishing once I FIRE from my day job, I am unclear which code to use. Can the code vary year-to-year when filing my personal return?

Thank you!
General Discussion / Re: Selling house-capital gains tax?
« Last post by KeithTax on August 01, 2017, 07:11:25 PM »
You probably will get a partial Section 121 exclusion on the sale if it is your primary residence. The $250,000 exclusion of gains from a primary residence sale if it is your primary residence for 2 of the last 5 years is usually prorated in cases like yours. The $250,000 is prorated, not the capital gain.
Wealthy Accountants in Your Area / Orange County/San Diego area
« Last post by pchintawat on July 27, 2017, 12:42:38 PM »
Are there any referrals to a Wealthy Accountant in the Orange County or San Diego County areas?

Wealthy Accountants in Your Area / Wealthy Accountant in the DC-VA-MD Area...
« Last post by dcrefugee on July 23, 2017, 01:43:04 PM »
Greetings, looking for a tax professional with a “Wealthy Accountant” mentality for tax and estate planning.  I live in the DC-VA-MD area but happy to work with anyone comfortable with virtual consultations in other locations.  Happy to expand more if you reach out personally.  Respectfully, -brian
Taxes / Re: S Corp Health Insurance
« Last post by Maccountant on July 20, 2017, 03:46:49 PM »
Typically you would claim the adjustment to reduce your AGI for self-employed health insurance premiums paid (Line 29 of your 1040).

The benefit would come from reducing your income tax liability through this adjustment.

Since you are the 100% shareholder, I presume your children are traditional employees (receive a W-2). Whether the company wants to offer health insurance to its employees or reimburse them for costs incurred is up to you (assuming you are compliant with ACA), but as an employee you don't get any benefit for healthcare costs paid out of pocket other then claiming them on the Schedule A (if you itemize) like you had mentioned. 
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