GeorgeM Posted July 14, 2009 Report Share Posted July 14, 2009 New client, has net income on sch C of 150K, owns 6 rental properties, showing a net loss for 2008 of 26K. Due to high income cannot take rental losses this year. I have thought of putting him as a real estate business , but this means any future profits will result in self employment taxes. And was wondering if IRS would go back to prior years and claim him as being in the re business and require amended returns using sch C in place of Sch E’s. My question is, is there any advantage of putting the rentals into a S corp? Right now he has no protection from a LLC or S corp. Any comments will be appreciated. Thank you Quote Link to comment Share on other sites More sharing options...
TAXBILLY Posted July 14, 2009 Report Share Posted July 14, 2009 Does he meet the requirements of being a real estate professional? http://www.irs.gov/businesses/small/articl...=146825,00.html taxbilly Quote Link to comment Share on other sites More sharing options...
RoyDaleOne Posted July 14, 2009 Report Share Posted July 14, 2009 "I have thought of putting him as a real estate business , but this means any future profits will result in self employment taxes." Just wondering where you found that the profits would be subject to self-employment taxes? Quote Link to comment Share on other sites More sharing options...
GeorgeM Posted July 14, 2009 Author Report Share Posted July 14, 2009 "I have thought of putting him as a real estate business , but this means any future profits will result in self employment taxes." Just wondering where you found that the profits would be subject to self-employment taxes? He would have to report it as a bsiness on Sch C Quote Link to comment Share on other sites More sharing options...
TAXBILLY Posted July 14, 2009 Report Share Posted July 14, 2009 Not if he qualifies as a real estate professional. He would be able to take his losses on Schedule E and not be subject to the phaseout. taxbilly Quote Link to comment Share on other sites More sharing options...
RoyDaleOne Posted July 14, 2009 Report Share Posted July 14, 2009 Us Florida guys need to stick together! lol Quote Link to comment Share on other sites More sharing options...
Lion EA Posted July 14, 2009 Report Share Posted July 14, 2009 NOT putting real estate into any type of corporation will avoid a nasty tax surprise as he sells properties. Hope he has a real good insurance policy. Depending on state law, he might have some liability protection with each property in its own LLC. He'd have to treat each property separately and not act as if the properties are his own personal checking accounts. And, he still wants good insurance coverage. Certainly look to see if he qualifies as a real estate professional, especially with that many properties. Quote Link to comment Share on other sites More sharing options...
joanmcq Posted July 14, 2009 Report Share Posted July 14, 2009 6 rentals isn't that many, really. SFRs wouldn't make you an RE pro, especially if he has a full time job as well. Quote Link to comment Share on other sites More sharing options...
Booger Posted July 14, 2009 Report Share Posted July 14, 2009 For what it's worth, I had an IRS agent tell me that they look EXTREMELY HARD at an individual who claims that he/she is a RE Professional when they have a full-time job in some other field. Quote Link to comment Share on other sites More sharing options...
Catherine Posted July 14, 2009 Report Share Posted July 14, 2009 For what it's worth, I had an IRS agent tell me that they look EXTREMELY HARD at an individual who claims that he/she is a RE Professional when they have a full-time job in some other field. Just saying "hi" to Booger -- I'm back from my trip; you can be comforted now. Catherine Quote Link to comment Share on other sites More sharing options...
Margaret CPA in OH Posted July 14, 2009 Report Share Posted July 14, 2009 Welcome back! How was the ride? It's been a challenge keeping Booger happy but we've done our best. Quote Link to comment Share on other sites More sharing options...
Catherine Posted July 15, 2009 Report Share Posted July 15, 2009 Welcome back! How was the ride? It's been a challenge keeping Booger happy but we've done our best. The ride was terrific. I've added a couple of pictures below. There are more on my Facebook page. One is me on the Trail of the Coeur d'Alenes -- really lovely, all flat. The other is from near the top of the Route of the Hiawatha (another rail line, named for the train, not the tribe!). On the far mountains you can still see snow.... Catherine Quote Link to comment Share on other sites More sharing options...
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