by on May 15, 2012 Leave a Comment

Still learning after all of these years – The Internal Revenue Code

While I make it my business to understand the tax code, it becomes apparent sometimes just how much there is to know. New regulation is only part of it. Existing tax code is also not stagnant and often there are finer points missed or little used. The tax code is made up of many exceptions that for the average person are little or never used, but for tax preparers we need to know when any exceptions might apply.

Non-stop learning

As I look back on this tax season I realize that I probably learned more during this season than any other. For me, that’s saying something because I’ve been at this for over 20 years. [Read more...]

Filed Under: IRS Tagged With: ,
by on May 9, 2012 Leave a Comment

Getting Things Right – The Challenge For Real Estate Investors Everywhere

What’s frustrating for many real estate investors around income tax time, is the gnawing little voice constantly asking whether or not their income tax returns are correctly done. I’m here to tell ya that ain’t the biggest issue when it comes to tax returns. Sorry to do this to ya, but in my experience, investors are an accurate bunch. Their goal in life isn’t to turn their tax returns into giant red flags, attracting the nearest auditor. Besides, most of the math is fairly simple, even if the return’s instructions aren’t. :)

The real potential issue.

BawldGuy Axiom: In this age of uber-accessible information, finding answers to our questions is, generally speaking, not a major problem. What bites us where we sit are the answers to those questions we never knew to ask. Answers to unasked questions can be deadly.

One of the many ways you can look at your tax return is as a summary of the investment strategy(s) you’ve chosen to execute — purposefully or not. The question beggin’ to be asked is,  [Read more...]

Filed Under: 1031 Exchanges, IRS, Real Estate Investing
by on April 30, 2012 Leave a Comment

When the IRS Simplifies it Often Gets More Complicated – Depreciation Or Expense?

Over the years congress and the IRS have created a number of code sections describing the treatment of fixed assets, depreciation and when merchandise is inventory. These various code sections have become quite complex. Pieces of the investment tax credit rules for example are still part of the regulations, though for the most part the investment tax credit has been done away with.

In the last several years the IRS has been attempting to clarify and bring these various code sections back together. Several times they have issued proposed regulations. In December 2011 they finally issued temporary regulations that were supposed to fix many of these loopholes.

I believe that many investors will be surprised by what is in the new regulations. For one, investors will need to understand what the major components of a building are and track the extent of repairs to a major component. It will also be necessary to estimate the cost of a component that has been replaced.

You might ask, what does all of this mean in plain English and how does it impact your investments? [Read more...]

Filed Under: Depreciation, IRS Tagged With: , ,
by on April 19, 2012 Leave a Comment

Do You Want the Path of Least Resistance?

You know in the ‘ole days, it was not uncommon that many CPAs, Brokers, and Accountants would tell their clients that self-directed IRAs and 401Ks were “illegal.”  Many of these professionals may not have been trying to steer their clients out of selfish interests…they just may not have known that such accounts, as long as established and executed correctly, are quite legal.

Then 2008 came and not only did it seem that many of these professionals became aware of such plans, it almost seemed that “self-directed” anything became the new buzz words.  Heck, it even seemed as if everyone wanted to set up such plans (evidenced by the fact that I have had more than a handful of people ask PGI if we could train them to enter the field).

So, I never thought I would be doing a post on this topic…hey, it’s been so long, I almost feel like I am going retro :) .  But, I was speaking to a new client this week and he actually told me that he reviewed a self-directed 401K with his broker first and was told that such a plan was “absolutely illegal.”  Feeling discouraged, he felt as if his broker may have selfish interests, so he reviewed it with his CPA.  Guess what?  Well, his CPA never said it was illegal, but said he had “never heard of it before.” [Read more...]

Filed Under: 401(k)'s & IRA's, Asset Protection, IRS, Real Estate Investing
by on April 17, 2012 3 Comments

Reading Information from the IRS . . . Hooray!!??

Okay, all bad humor aside, there are some IRS publications that people should and might even want (notice I didn’t say enjoy!) to read, especially if they are interested in creating a self-directed IRA or 401K plan.  You might be asking why you would want to read such material.  Well,

1)  Some people, including myself, still believe that you can’t learn everything that you want to learn by just watching YouTube (sorry, YouTube).  Heck, even if you could, I think YouTube has the ‘ole “we are not responsible for content” disclaimer well established.

2)  If you are establishing a self-directed plan and utilizing a company like PGI (or any other company) to establish your self-directed IRA or 401K, NO company in the market place assumes responsibility for your self-directed decisions and investments.  And, yes, even for those custodians who “hold” your funds and assets…they clearly state in tiny, tiny print on their application, that they are not responsible for any investment you make, or your compliance with IRS regulations.

IRS Publications [Read more...]

Filed Under: 401(k)'s & IRA's, IRS
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