October 4th, 2023
This week, we pick up where we left off with Courtney Holness and Cyril NeSmith. We had looked at tax plans for both of them last week. There was some additional clarification needed on each of the clients for the tax plans. That information was gathered and we jumped back in to continue adding to their tax plans. We discussed the Federal Solar Tax Credit, looked closely at the rules for donating stock to family members, Captive Insurance, and Income Shifting. It was a great continuation to the lab from last week!
October 11th, 2023
We had a wonderful Tax Lab this week. It was a treat to have our very own Jackie Meyer present to lead the discussion, answer questions, and give tips and tricks to make tax planning easier! We began discussing a tax plan submitted by Candace Castner, but due to technical issues, we were unable to discuss it in detail. We switched gears to take a look at a tax plan submitted by Courtney Holness. Courtney has a client located in New Jersey who purchased 3 rental properties in 2022. He is currently renting out two units as long term rentals, but has plans to use the third unit as a short term rental. He is currently still a W2 earner from a separate job. He has a capital loss carryover of about $10,000. The group discussed several strategies that might benefit the client, including cost segregation, qualifying the client as a real estate professional, short term rental strategies, solar improvements, and maximizing business deductions.
Next, Mika Mellor introduced a potential client, a doctor with a substantial art collection valued at $200,000. Given the client's disinterest in retaining the art pieces, Jackie proposed the idea of making a charitable donation. We also explored the concept of a charitable remainder trust. Upon viewing the client's tax returns, the group noticed a significant burden of self-employment (SE) taxes. Jackie recommended considering entity restructuring to address this issue. Lastly, we recognized that doctors are subject to the SSTB (Specified Service Trade or Business) designation for Qualified Business Income (QBI) deductions. Jackie proposed a separate tax strategy focusing on managing penalties and fees, which could yield substantial savings for the client.
Finally, we had a question from Cyril NeSmith about passive income from a medical equipment business. Jackie discussed some strategies about managing K1's and how to structure entities. We packed a lot of great discussions into our time today!
October 18th, 2023
We did a deep dive into Cost Segregation this week in our tax lab! We continued to work with Courtney Holness on her tax plan for a client with three rental properties. We spent a lot of time looking at the possibilities of Cost Segregation for this client, and had a wonderful discussion with a lot of input from the group. We also took a close look at qualifying the client as a Real Estate Professional. We compared the requirements for qualifying with a long-term rental property verses a short-term rental property. Additionally, we spent some time discussing the use of Client Questionnaires with Cyril NeSmith. We discussed how and when to use Client Questionnaires, and even took a look at how the Client Questionnaires in TaxPlanIQ function.
October 25th, 2023
Today we looked at a tax plan submitted by Lisa McAllister. Lisa has a client who is a real estate agent. The client has discovered that she has a $30,000 tax liability and is looking for a way to avoid paying this much in taxes. Currently, she has a Single Member LLC. There is no payroll at the moment. The client would like for Lisa to save on taxes for the year 2022 as well as 2023. The discussion centered around a late S Corp Election. The group discussed how to structure this, focusing on the filing of a 1099. They also discuss the penalties and fees that might arise with this late S Corp Election. Lastly, we discussed the fees that Lisa could charge for Phase 1 and 2 of the plan.