Recent Blog Posts

  • Roth Conversions – When You Should Convert Your IRA or 401(k) to Roth?
    Many Americans wonder when they should convert their IRA or 401(k) to Roth? Roth IRAs and 401(k)s grow tax-free and come out tax-free at retirement so if you’ve haven’t thought about this, well, you should . If you have a traditional IRA or 401(k) then that money grows tax-deferred and you pay tax on the money as it is drawn out at retirement. Roth accounts, on the other-hand, are tax-free and tax-free is just better. Who could argue that? Yet, most Americans have been sucked into traditional IRAs and 401(k)s because we get a tax deduction when we put the money in a traditional account and that saves us money on taxes now. The good news is that you can convert your traditional IRA to a Roth IRA or your traditional 401(k) to a Roth 401(k). The price to go from traditional to tax-free Roth is you have to pay ... Read more
  • The Difference between Sub-Contractors and Employees
    This is a very important area of employment law, and far too many business owners cut corners in this area and don’t think it’s a big deal-  IT IS a big deal.  How you classify a ‘worker’ in your business, whether as an employee or sub-contractor, can have far reaching effects to you AND your business. I understand the business owner’s plight.  Many entrepreneurs are wary of the costs and extra paperwork to bring on an ‘employee’ in the business.   Terms such as SUTA, FUTA, FICA and Workers Compensation will often times deter the employer into making the ‘right’ decision, and it could ultimately be devastating to their business. Bottom line, some business’s try and treat their “employees” as “sub-contractors” and 1099 them rather than set up payroll and follow the proper procedures when hiring an employee. The IRS consistently warns taxpayers that if they are caught paying ‘employees’ as ... Read more
  • What You Should Know about Administering a Family Member’s Estate
    Most of us will, at some point in our lives, be called upon to administer the estate of a departed family member or loved one. While it may seem like an honor to have been entrusted with this responsibility, the reality is often it is a thankless, time consuming job, and even more so if there are disagreements and disputes among the heirs or beneficiaries of the deceased. Being asked to shoulder the responsibility of administering a decedent’s affairs while still mourning their loss can be challenging. The precise rules and procedures that apply will depend on whether the decedent had a trust that was fully funded, whether probate will be necessary because the either decedent did not have a trust or did not fully transfer all relevant assets into the trust. It will also depend on which state laws apply as well as the value of the estate. Keep ... Read more
  • The 1031 Exchange – A Real Estate Investor’s Secret Weapon
    To 1031 or not to 1031…that is the question. Back in the real estate boom of 2005-2008 the 1031 exchange was an often used tax strategy by real estate investors looking to avoid the tax when selling highly appreciated properties. However, due to the “Great Recession” at the end of the boom, the 1031 strategy got put on the back burner of most taxpayers minds as worries of job security, declines in retirement accounts, and economic instability became the soup de jour. However, Americans are known for their resilience and now, almost a decade after that near-fatal collapse of the economy, the sun has come back out again. Property values are up and again investors are looking for creative ways to get around the state and capital gains tax. Bottom line, the 1031 exchange has proven to be one of the most effective ways to save tax dollars today! The ... Read more
  • How to Fund Your Start-Up with Self-Directed IRA Investors
    There are 25 trillion dollars in retirement plans in the United States. Do you know how these funds can be invested into your business? Yes, it’s true, IRAs and 401(k)s can be used to invest in start-ups, private companies, real estate, and small businesses. Unfortunately, most entrepreneurs and retirement account owners didn’t even know that retirement accounts could invest in private companies. Think of the 25 trillion and who owns these funds. It’s everyday Americans, it’s your cousin, friend, running partner, neighbor…it’s you. In fact, for many Americans, their retirement account is their largest concentration of invest-able funds. Yet, you’ve never asked anyone to invest in your business with their retirement account. Why not? How much do you think they have in their IRA or old employer 401(k)? How attached do you think they are to those investments? These are the questions that have un-locked hundreds of millions of dollars ... Read more
  • Feds Make 2017 Rule Change to Help Entrepreneurs Raise More Money
    Your federal government has modified rules making it easier to raise more money from so-called “unaccredited investors”. Under the updated rule, known as Rule 504, you can raise up to $5 million from unaccredited investors in a 12-month period. Prior to the 2017 update, you could only raise $1 million from unaccredited investors. The updated $5 million cap is available under Rule 504 offerings and should only be used when the offering is a private placement memorandum offering (“PPM”), where you aren’t marketing the offering to the general public but privately to know persons and contacts. The new $5 million cap will make it easier to raise larger amounts of money from unaccredited persons and we expect to see an increase in persons using Rule 504 to raise money for operating businesses and real estate investments. Background to Securities Offering Exemptions At some point in its lifespan, just about every ... Read more
  • Tax Strategies for US Military Personnel- Active Duty
    At KKOS Lawyers and Kohler & Eyre CPA’s, we salute our brave men and women in uniform. THANK YOU for putting your life on the line to protect our great country. We honor and cherish your sacrifices that keep us safe. In turn, we try to give back where we can, personally, to you amazing service members.  As such we have summarized some important tax strategies for active duty military personnel. We work diligently to help our active-duty military clients as well as military veterans strategize and make the most of tax planning opportunities. Here are 5 tax strategy/opportunities to be aware of and discuss with your tax advisor each year. Strategy #1: Know what benefits/compensation are taxable and which ones are not! Like all U.S. citizens, members of the Armed Forces receive income that is taxable to them. This includes foreign source income (income earned overseas). Some foreign income ... Read more
  • 5 Point Checklist to Keep Your Solo 401(k) Compliant
    Solo 401(k)’s have become a popular retirement plan option for self-employed persons. Unfortunately, many of the plans are not properly maintained and are at the risk of significant penalty and/or plan termination. If you have a Solo 401(k), you need to ensure that the 401(k) is being properly maintained. Here’s a quick checklist to make sure your plan is on track. Is the Plan Up-to-Date? The IRS requires all 401(k) plans, including solo 401(k)s, to be amended at least once every 6 years. If you’ve had your plan over 6 years and you’ve never restated the plan or adopted amendments, it is not compliant and upon audit you will be subject to fines and possible plan termination. IRS Rev Proc 2016-17. If your plan is out of date, your best option is to restate your plan to make sure it is compliant with current law. On average, most plan documents we ... Read more
  • Warding off Unfair Competitors with Good Legal Practices
    Whenever a business owner collaborates with others in partnerships or joint ventures, they MUST consider the risk of sharing too much information. Certain documents can be critical to protecting your secrets or proprietary information.  Bottom line, business owners need to be cognizant of the need to protect their ideas, property, customers, or other assets from misappropriation or from being challenged by competitors. Depending on the nature of your business and relationship in the industry, some possible considerations may include the following: Does your name, idea, design, or invention infringe upon the rights of an existing competitor?   For example, is there any conflict with an existing patent, trademark or copyright?  If the success of your business depends in any way upon association with a particular name, idea, design, artistic creation or invention, it is important to determine whether anyone else already has established rights in this area, especially if you ... Read more
  • Owner’s Liability After Your LLC is Closed or Dissolved?
    Many business owners wonder whether their LLC will protect them from claims and liabilities after their LLC is closed. Does the limited liability protection of the LLC still apply? Does it only apply for claims when the LLC was active? What about after the LLC is closed or dissolved? What if the claim is about something that arose when the LLC was in good standing but was something you never knew and filed after the LLC is dissolved? Here are a five tips that answer these questions and that will help you decide when to dissolve your LLC. First, when you close an LLC, a process known as dissolution, you must pay off known/present LLC creditors before distributing assets and profits to the owners of the LLC.  If you fail to pay off known creditors the LLC and if you instead distribute assets of the LLC to the owners, then the ... Read more
  • The Perils of Investing with Friends, Neighbors and Church Members
    Every week our firm gets call from clients around the country who have lost money by investing with friends, family or neighbors they trusted—but who were not licensed to sell securities or did not properly document the relationship as a partnership. Many of these new clients have given someone a short-term, high-interest loan with a promissory note that has not been repaid. Others have invested money with someone who claimed to be achieving spectacular returns from investing in real estate, commodities, or foreign currency. Some invested into these ‘projects’ directly out of their retirement plan and wonder if now ‘all is lost’. Nearly in every case there is a guarantee of unusually high returns with no risk, and of course, they have never missed a payment. However, by the time they call our office, the money is gone, their calls are being ignored and they want legal advice on what ... Read more
  • What Being Dragged Off a United can Flight Teach Us about Contract Law?
    Unless you’ve been in a coma for the past week or so, you’ve probably seen the cell phone camera footage of airport police dragging a kicking and screaming Dr. David Dao off a United Airlines flight at Chicago’s O’Hare Airport last week. At this point, the story is well known.  United needed to get four additional flight crew employees on Dr. Dao’s flight, so they asked paying customers to give up their seats voluntarily, for increasing levels of compensation.  When there were no takers, United selected four passengers “at random” for involuntary removal from the flight.  Dr. Dao was one of the “lucky” four selected.  However, when the time came to make the walk of shame down the aisle and off the plane, Dr. Dao refused to get up.  That’s when airport security was called in to physically remove him and cell phone cameras started to roll. This fiasco, and ... Read more
  • Self-Directed IRA Valuations: Why Does My Self-Directed IRA Custodian Ask for a Valuation Update Every Year?
    If you have a self-directed IRA with non-publicly traded assets like real estate, private stock, or an LLC interest, you’ve definitely been asked for an annual fair market valuation for the assets in your account. Why does your IRA custodian ask for this every year? Because they have to. An IRA must report its fair market value to the IRS annually. Fair market value is reported to the IRS by your IRA custodian via IRS Form 5498. For standard IRAs holding stocks or mutual funds, those account values are automatically determined as they simply take the stock or fund price as of the close of the market on December 31st each year, and they use these amounts to set the year-end account fair market value. For self-directed accounts, such fair market values are not readily available and it becomes the IRA account owner’s responsibility to obtain their self-directed investment values ... Read more
  • The Power of the Health Savings Account (HSA)
    So many of us are sick and tired of hearing news reporters talk about the problems with today’s health care, and even worse is the political commentary on what should and shouldn’t be fixed. In fact, with all of the confusing sound bites, arguing and rhetoric in the media today, it’s hard to believe there are any real solutions that could positively impact our personal lives. However, I believe there are strategies that can work! Your personal plan does not have to be a mess…there are options! The Health Savings Account is one of the most powerful pieces of a well designed health care strategy.  It includes saving money, saving taxes, building a tax-free ‘bucket’ for health care and most importantly taking control of your own health care strategy. You save money because in order to have an HSA, you have to have a ‘high deductible health care plan’.  Well, ... Read more
  • What Do I Need to Know About Title Insurance
    We all know that title insurance is a necessity when purchasing real estate, but many do not have a sufficient understanding of what title insurance is really for and steps we can take to deal with title insurance companies to prevent being embroiled in a title dispute. Litigating title disputes can often be long, expensive, and often difficult to predict the outcome with any certainty. For that reason, having a solid grasp of what title insurance can do and cannot do is important for any would be purchaser of real estate. The condition of title is one of the most important due diligence items for a buyer of real estate.   Purchasers usually want title to real estate to be clean, or as lawyers describe it to be “marketable.” Marketable title does not mean title that is completely free from any liens or claims, but merely title that is sufficiently free ... Read more