IRS Audit Issues for Real Estate Owners

In recent years, the IRS has audited only about 0.5% of individual income tax returns. Their audit choices have been more high net worth returns and larger businesses with more tax issues. However, based on recent tax legislation, the government has provided more IRS funding to help close the tax gap — the difference between […]

Prepare and Plan for Real Estate Sales in Advance

In recent years, the tax law has focused on real estate as a complex asset to own, but even more complicated to sell. The use of real estate in an operating business can create many tax benefits, including the ability to claim depreciation on the business use, create an investment for tax credits and even […]

Prepare for IRS Plans To Increase Tax Audits

In recent years, the IRS has audited only about 0.5% of individual income tax returns. Their audit choices have been more high net worth returns and larger companies with more tax issues. But based on recent tax legislation, President Biden and some legislators have targeted more IRS funding to help close the tax gap — […]

The Tax Impacts of Capitalizing Versus Expensing Costs of Real Estate

Individuals with real estate businesses often expect to deduct business-related expenses for tax purposes. But those tax deductions might not be a guarantee. Many real estate development costs are required to be capitalized and added to the cost of the building. In this case, there are additional rules to determine if building costs qualify for […]

Consider a Turnaround Strategy for COVID-19 Problems

The COVID-19 pandemic has affected many people and businesses across the country. After a year has passed, many thriving businesses are now barely breaking even while struggling businesses have been closed permanently. This can leave both property owners and landlords in financial trouble, because a loss of tenants and rent may cause buildings to fall […]

Considerations Before You Begin Social Security Benefits

The full retirement age for Social Security benefits, also called “normal retirement age,” is generally between ages 66 and 67. The age was set at 65 for many years. In 1983, Congress passed a law to raise the age because people are living longer and staying healthier in older age. The law raised the age by […]

The Tax Importance of Having a Profit Motive

Individuals with real estate businesses often expect to deduct business-related expenses for tax purposes. But those tax deductions might not be a guarantee. One married taxpayer recently learned the hard way when the IRS disputed business deductions that led them to the U.S. Tax Court. Sarkin v. Commissioner provides a helpful overview of how the […]

New Tax Strategies for Charitable Donors

The passage of the Tax Cuts and Jobs Act (TCJA) changed or eliminated some tax benefits for many taxpayers who frequently itemize deductions. However, tax-saving strategies may still be available. One solution is “bunching,” or donating twice as much in alternate tax years, to take advantage of itemizing in one year and then claiming the […]

Can Nonrecourse Loans Still Create Personal Liability?

With the many types of loans available to borrowers, nonrecourse loans remain popular with borrowers because they can shield them from personal liability. Even if you own your business through a limited liability company, banks may not be willing to lend funds without recourse. Lenders will try to add “carve outs” to minimize that protection. […]

Maximize the Benefit of Nondeductible IRA Contributions

Many taxpayers choose to contribute to Roth IRA accounts because they provide for tax-free distributions in the future. However, not all people are eligible to contribute to a Roth IRA. If your income is too high, you may want to consider making nondeductible contributions to a traditional IRA.

Do You Trust Your Trustee?

Trusts are one of the most common estate planning options and are appealing for many reasons. However, they can be complicated to set up and difficult to keep updated for your lifetime planning. One of the big decisions you need to make when establishing a trust is who will act as trustee.

The Tax Impact of Theft in a Real Estate Scam

No one ever wants to be the victim in a real estate scam, but as scams become more increasingly sophisticated, the risk is also growing rapidly. Though tax rules offer some relief, victims do not always benefit from a tax deduction for fraud losses.

Estate Tax Planning: Why Annual Gifts Are Still Important

With the 2018 federal estate tax exemption being raised from $5.6 million to $11.2 million, some are wondering if making lifetime gifts to your loved ones may be less important than in the past. Even if your wealth is well below the exemption amount, a lifetime gifting program still offers significant estate tax planning and personal benefits.

Eminent Domain: Understanding the Tax Treatment Issues

Eminent domain is the process by which a government or entity has the ability to take private property for public use. Any property claimed through eminent domain must be fairly compensated. This triggers a process by which “fair compensation” is determined. Once this process is complete, there will be an award to the owner of the property, based on “severance damages” for either loss in value of a larger parcel of property that was not acquired, or the value of the portion of the property that was taken. This article covers the intricacies and tax treatment issues behind eminent domain.

Buy-Sell Agreements Help Resolve Your Future Problems

Anticipating the future is one of the major responsibilities of business owners.  When a business is faced with uncertain questions, such as “What if we do not get the loan?” or “What if we lose our biggest account?” or “What if a co-owner dies, becomes disabled or retires?” then the owner needs to make a […]

Can You Reduce Your Trust’s Income Tax Bill?

Trusts can accomplish a variety of estate planning goals, including wealth distribution, asset protection, estate and gift tax reduction, and probate avoidance. However, taxpayers should not overlook their income tax treatment. By reducing a trust’s income tax bill, they can preserve more wealth for their heirs. This article covers a U.S. Tax Court ruling addressing material participation in regard to passive activity loss (PAL) rules, and how the court’s decision created new tax-saving opportunities for many trusts.

Do You Have Digital Assets Included in Your Estate?

If you are reviewing your estate planning or helping a friend or family manage their estate, there are many helpful options for managing the assets of an estate. This blog examines the increasing presence of digital assets in estates and how to manage them.

Distinguishing Between Investors and Dealers in Real Estate

One who deals with real estate transactions on a regular basis may wonder why it is necessary to make the distinction between an “investor” and a “dealer.” This blog discusses why that distinction is key in the eyes of the IRS and explains how the IRS distinguishes.

Getting a Tax Benefit from Capital Losses

As volatile as the stock market has been, you probably have some underperforming investments which have lost value that you are considering selling. Tax planning is especially important when you are considering selling at a loss. This blog explains how selling holdings for less than the purchase price can lower a person’s income tax bill.

Turn Your Timeshare into a Tax Benefit

Many timeshare interests permit the owner to use vacation properties for a designated period each year in exchange for a purchase cost and an annual fee. So if the personal use of the timeshare is no longer providing a benefit and the cost of utilities, repairs, maintenance and taxes are adding up each year, it may be the right time to consider how the timeshare can reduce your taxes.

Self-Rental is an Exception to the Passive Loss Rules

If you rent property to one of your own businesses, you may accidentally catch the eye of the IRS. Although rental real estate properties are generally treated as passive activities, the self-rental rules may recharacterize the rental income as nonpassive in some cases. That is exactly what happened to one investor who leased property to his wholly-owned S corporation.

Tips to Avoid an IRS Audit: Real Estate

Many IRS audits are designed to be focused on basic tax issues, but real estate deals can be complicated and confuse the basic facts and key issues of your tax situation. Here are five common tax issues that frequently get audited in the real estate industry:

Segregate Costs to Save Taxes

Many real estate costs are subject to capitalization rules for tax purposes. These rules require the cost of buildings to be depreciated annually over the useful life of a building. The IRS has added several tax benefits in recent years to increase the amount of tax deductions available if certain guidelines are met.

Avoiding “The Boot” And Other Tax Surprises

Many tax rules are designed to be simple and easy to understand, but real estate activities are not always the same. Many of these transactions can create tax surprises if you do not plan ahead to review how taxes apply to your situation. Here are five common tax traps and surprises to avoid that often occur with our real estate clients.

Real Estate Group Newsletter – Spring 2024

ORBA’s Real Estate Group’s Spring Newsletter discusses the various legal and tax considerations of owning various types of real estate, including out of state residential rentals.

Real Estate Group Newsletter – Fall 2022

ORBA’s Real Estate Group’s Newsletter covers the non-financial factors that investors use as part of their analysis to screen potential investments and the recent legislation regarding like-kind exchanges.

Wealth Management Group Newsletter – Fall 2017

ORBA’s Wealth Management Group’s 2017 Fall newsletter offers insight for high-income earners and the benefits of Roth IRAs, as well as options for employees with restricted stock investments.

Wealth Management Group Newsletter – Spring 2017

ORBA’s Wealth Management Group Newsletter is a quarterly publication focused on effective wealth management. The Spring 2017 issue includes two articles: “Portfolio Diversification: Too Much of a Good Thing?” and “Short-Term Needs vs. Long-Term Retirement Savings.”

Wealth Management Group Newsletter – Winter 2015

ORBA’s Wealth Management Group Newsletter is a quarterly publication focused on effective wealth management. The Winter 2015 issue includes two articles: “When Selling Your Business, Have a Retirement Backup Plan” and “Year-End Planning Tips to Lower Your Tax Bill.”

Real Estate Group Newsletter – Spring 2014

Review Your Real Estate Business Structure for Ease and Flexibility TOM KOSINSKI, CPA, MST Choosing the right business structure for your real estate venture requires careful thought and analysis. A corporation is still an alternative that can provide many tax and legal benefits, but there are also many non-corporate alternatives, which generally are subject to […]

2014 Changes to Capitalization of Tangible Property Costs Will Impact Many Taxpayers

During 2014, final rules and regulations became effective for handling the acquisition, repair, improvement and disposition of real estate and tangible personal property. Many types of expenditures are covered in the final regulations, and they will likely affect all taxpayers that acquire, produce or improve tangible property.