Recent Blog Posts

  • 199A Deduction for Rental Real Estate Investors
    Unless you’ve been hiking through the Amazon jungle for the past year, you have most certainly heard about the Tax Cuts and Jobs Act (effective January 1, 2018). Furthermore, if you own a small business or own real estate, the topic of the 199A or 20% pass-through deduction has crossed your mind, or at least your email. This little gem called the 199A Pass Through is a 20% deduction off the bottom line profit of your business, but also comes with a lot of twists and turns and complexity. In fact, many don’t realize it also applies to rental property. That’s right! If you’re a landlord and have net rental income, you may qualify for one of the best tax benefits from the TCJA tax reform. Rental Real Estate under the New Law When the 199A was first passed, tax professionals didn’t think it would apply to passive income from ... Read more
  • The Domestic Asset Protection Trust may be Your most Effective Asset Protection
    The Domestic Asset Protection Trust is the most cutting edge and most affordable asset protection tool in America today. However, they aren’t statutorily recognized in each state, and because of this one has to be careful when and how to use this specialized trust. They are most commonly known as the DAPT and act as a type of trust that can give you significant asset protection in any type of lawsuit. They were created as one of the best ways to protect a personal residence from creditors, particularly in a situation where there is a great deal of equity in the home. The Basics The DAPT is a self-settled trust in which an independent trustee controls and/or distributes trust assets to the beneficiaries.  This allows the person who created the trust (known as the “settlor” or “trustor”), to reap the dual benefits of: (1) asset protection from outside creditors; and (2) ... Read more
  • 6 Ways to Protect Your Home From a Lawsuit
    For most of us, our home is one of our most valuable assets. It truly is our “castle,” but can also be one of our most vulnerable assets. Although we need to protect it at all costs, we face several dilemmas that create significant hurdles to protecting the complete value of our home. Is an LLC a solution for your primary residence? First, I’m concerned about the LLC being a simple ‘silver bullet’ solution to protecting a home.  An LLC wasn’t designed or built for this purpose. The LLC is obviously perfect for income producing assets, or even a cabin, beach house, farm or 2nd home in a VRBO or Airbnb strategy. But how is a personal residence a business asset, it’s not. If I was a litigation attorney going after a debtor’s home in an LLC I would immediately attack the corporate veil and claim a co-mingling of personal ... Read more
  • Choice of Entity – Is an S Corporation right for you?
    I get asked almost daily if an S Corporation is a good fit for their business and I can tell you that there is a lot at stake. So much so, that it is well worth your time to know the basic differences between an S Corp and LLC before you ask a licensed professional for a recommendation. You are the captain of your own ship! You need to be able to determine if your professionals are advising you under standard and well recognized basic concepts. Surprisingly there are advisors across the country that miss the mark and give truly damaging advice that costs small business owners thousands of dollars. Here are five of the major factors that the lawyers at our office considers when making a recommendation of an S Corp to clients. Before proceeding further, I would like to clarify that when you have an LLC ‘taxed as ... Read more
  • Why Starting a Small Business is the First Step in Building Wealth
    I realize this may sound cliché or even crazy, but the FIRST Step I have learned over my 18 years as an Attorney and CPA, is that if someone REALLY wants to build wealth and save taxes, they need to Start a Small Home Based Business. Please hear me out for those of you that work a ‘regular job’ and DON’T want a small business. Now, I’m not asking you to quit your ‘day job’, I’m just asking you to at least have a small business ‘on the side’. Read this article on ‘Why Quitting Your Day Job May Not Be a Good Idea”. HOWEVER, there are so many good reasons to have a small project brewing on the back burner, and very few reasons not to.  Some say it is too ‘risky’ in today’s economy to start a business.  I say it is too risky NOT to start a ... Read more
  • A New Bundle of Tax Strategies – BABY EDITION!
    I had a wonderful phone call last week with two very awesome clients of mine. We were getting ready to discuss some business strategies when they decided to share some “news” with me. I curiously asked what the news was since I good tell that it was good. “We’re pregnant with twins!” was the reply. This was not something that had come easily for this couple, so beyond just the normal excitement around the announcement, there was an extra bit of happiness that rang through to me. I wished that I could have been present in person, as I would have liked to give them both a big hug! After we talked a bit about the baby, they asked a familiar question—“Is there any tax planning that we should be thinking about for the babies?” I chuckled and asked if I could defer the answer for a week and write ... Read more
  • Tax Strategies for US Military Veterans
    Coming back into the general population after serving in the Military can be a very difficult transition. In fact, for many of us that never served in the military, we can’t imagine the stress and challenges. With that said, and after a heartfelt thanks for your tremendous service on our behalf, we wanted to offer a few potential tax strategies that might make your transition a little smoother…at least on your tax return. Strategy #1: Pension payments are typically taxable, disability benefits are not The first thing to know is that pension payments received after retirement from the military are taxable and should be reported on your tax returns. If you also receive disability benefits from the Department of Veterans Affairs, you do NOT need to report these disability benefits on your personal income tax returns. Disability benefits may include the following items: Disability compensation and pension payments for disabilities ... 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
  • 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
    There’s a lot of talk on the internet in the entrepreneurial and real estate investing blogosphere regarding the single-member LLC. Some people seem to think they are completely worthless, while others prescribe them like aspirin for headache. However, as is almost always the case, neither extreme is correct. Single-member LLC’s have their place in the spectrum of business entity choices, and whether such an entity is right for you will depend on the details of your own personal situation. As the name implies, a single-member LLC is simply a limited liability company with one owner (member), instead of multiple owners. Single-Member LLC Pros 1) Asset Protection: as is the case with any LLC, the single-member LLC will act as a shield to protect your personal assets from the liabilities associated with the business conducted by the LLC. For example: if your LLC owns a rental property, and someone slips and ... Read more
    1. Make an S-Election on an LLC you set up this year and used for Operations– This is a unique trick we implement for several clients each year. If you previously paid a lot in Self-Employment Tax and for some reason had an LLC (sometimes a major mistake by other planners), you can easily still elect it to be taxed as an S-Corporation retroactively to January 1st, 2013. However, don’t forget to do your payroll (see the next strategy…you can’t pull this off in the spring without completing the payroll portion in Strategy 2 below). 2. Set YOUR Payroll Amount– If you have an S-Corporation, C-Corporation OR LLC-taxed as an S-Corporation, it’s critical you nail down your payroll before year-end. A lot of people wait until 4th quarter to do their payroll, which is not a good idea, unless you want to get nasty letters and a potential audit from ... Read more
    This is a common question we are asked on a regular basis and an important one. In fact, it tends be a common concern with Canadian clients doing real estate projects in the U.S. Here are some basics that can help you if you are a foreigner or investing with a foreign partner. Why an S-Corporation in the first place? It’s no secret that an S-Corp is a fantastic entity for U.S. real estate investors rehabbing, fix and flipping or wholesaling properties. Moreover, it’s perfect for consulting, selling a product or getting commissions. The S-Corp can be phenomenal to save on Self-employment tax. Thus, it’s no surprise that many foreigners will often hear or read about the benefits of an S-Corp and wonder if this is the right choice for them. Some Foreigners don’t need an S-Corporation? Understanding that S-Corps save on Self-Employment tax, it then begs the question: ... Read more
    Some business owners who want to save on employment taxes treat employees like contractors and 1099 them rather than set up payroll with a W-2. BEWARE!! I certainly understand you want to save money in this area of your business, employment taxes, workers comp, unemployment, etc… can be a pain AND expensive. However, just because you ‘say’ they are a sub and give them a 1099, doesn’t make them a sub-contractor. Basically, if they walk like a duck, act like a duck and look like a duck… they’re a duck!!! I’m sorry. Here are the two concerns we need you to know about: First, the IRS is cracking down on this practice. As reported in the New York Times “Federal and state officials, many facing record budget deficits, are starting to aggressively pursue companies that try to pass off regular employees as independent contractors.” The IRS consistently warns taxpayers that ... Read more
    A Strategic Plan is very different from a Business Plan. A Strategic Plan sets forth a timeline of specific tasks that need to be completed in order to make your Business Plan a reality. It’s a specific list of objectives to reach specific goals. This time, more than any time of the year is a perfect time to revisit our Strategic Plan, or build one if we don’t have one. Even experienced business owners can benefit from using a Strategic Plan as an integral part of their business. It is so difficult to manage all of the loose ends and chaos that can occur when running a small business. A Strategic Plan helps tremendously. A Strategic Plan is essentially a checklist of things that need to be completed in the next month, 3 months, 6 months, and 12 months. It takes your business plan to the next level when you ... Read more