ZOMG, Taxes.

[Jacob0883]

So you say it is fair to tax the already too poor to sustain themselves even more?  I don't get it.

The point is that letting the government use your money for months, interest free, is retarded no matter how you slice it.  I guarantee that they are making more money with it, and you sure as fuck aren't getting any of it.

Anyone who gets a refund is fucking retarded, I will agree with that.  That is why I have made sure my parents and I have not for a long time.  You can't really blame all that on the tax code though, that is just people be dumb as hell and not understanding personal finance.

[Polysorbate80]

Heh...  not bad,  and pretty standard operating procedure.  It helps spread the liability around, such that you won't be hung out to dry if one of the orgs runs into legal issues (lawsuit, Workers Comp problem,  income or sales tax issue, etc).

Problems:

When you are lessor and lessee,  and the lessee is your business, you can't dodge out of paying SE Tax by funneling from your self-employed business to your rental company as rental income.  Maybe you can get away with a reasonable income from your rental entity,  but too much and you'll get slapped by the IRS.

Since all the various sources of income flow through to page 2 of the Sch. E,  the total income from all the operations should remain largely the same.  It will all flow through to the same box on the front of your 1040,  and shouldn't affect what tax rate you're in.

No, it is definitely not to avoid self employment tax.  However, if you add a few more individual shareholders in each entity with stock purchase agreements and maybe an LLC where the general partner is another entity created exclusively for that purpose, you can usually add enough complexity to the issue that, eventually, when the holding company owns more than one piece of property for example, the self employment tax becomes a non issue.

Remember, if the operating company is having trouble initially in paying its bills, there is nothing wrong with the holding company agreeing to forbear collection of rental income until the operating company is flush.  No documentation should be required to perform this transaction as long as the corporate formalities are observed. 

Nothing in that list was revolutionary.  You and I have seen much more complex organizational structures in practice.  It was more for the non-lawyers and non-CPA's to see that you might actually need to pay for some expert advice as some of the experts are actually worth way more than you pay them.  All of this presumes that you hire both an attorney and a CPA.  Any entity that is planning for actual success over the long term needs to refer to competent professionals and not to Tax for Dummies or Corporations for Dummies. 

I have done my own taxes ever since my father in law's trust fund was fully distributed about 10 years ago.  My personal situation is fairly simple.  When you add complexity, add an expert before hand. 

Hey, I let our lawyer and accountant deal with most of that kind of stuff, especially the taxes--those went out of my league the moment my wife incorporated. 

We weren't even planning on getting into major property purchases; the company really doesn't need to own property at all and doesn't even have sufficient established credit to buy that much real estate.  This just worked out better for us--we get another house effectively paid for on the company dime (rent = payments, all we pay is tax on the income)--and the only one who's cranky is her partner, who had wanted the purchase to drive up the value of his shares.  However, considering that my wife somehow let him have those shares without him ever investing *any* money in the company (don't ask me, I dunno), I'm not exactly falling over myself to hand him money now :)

[Johny Cee]

No, it is definitely not to avoid self employment tax.  However, if you add a few more individual shareholders in each entity with stock purchase agreements and maybe an LLC where the general partner is another entity created exclusively for that purpose, you can usually add enough complexity to the issue that, eventually, when the holding company owns more than one piece of property for example, the self employment tax becomes a non issue.

Remember, if the operating company is having trouble initially in paying its bills, there is nothing wrong with the holding company agreeing to forbear collection of rental income until the operating company is flush.  No documentation should be required to perform this transaction as long as the corporate formalities are observed. 

Nothing in that list was revolutionary.  You and I have seen much more complex organizational structures in practice.  It was more for the non-lawyers and non-CPA's to see that you might actually need to pay for some expert advice as some of the experts are actually worth way more than you pay them.  All of this presumes that you hire both an attorney and a CPA.  Any entity that is planning for actual success over the long term needs to refer to competent professionals and not to Tax for Dummies or Corporations for Dummies. 

I have done my own taxes ever since my father in law's trust fund was fully distributed about 10 years ago.  My personal situation is fairly simple.  When you add complexity, add an expert before hand. 

Very good point about working in other shareholders, that I hadn't thought of.  A reasonable way to transfer assets from one generation to the next is to gift small amounts of stock (value below annual gift tax limits) a little at time.  The giftee still gets a stepup in basis at the death of the parent.

My response wasn't meant to be critical.  As I see,  you know your stuff.   

The discussion for me is interesting because I often run into the difference between how an attorney and an accountant looks at operations and organization. 

[Nazrat]

Johnny, the gifting of the shares to transfer assets is what I recommend when setting up a family limited partnership.  It is a great method to avoid generation skipping taxes and, with a well written stock purchase agreement, prevents the future ex spouses from "stealing" the family fortune. 

Assuming that the corporation is closely held, there is not much basis that will attach to no par stock if records are kept properly. 

The best part of being in private practice was designing structures to solve problems and knowing how to pierce the opponent's structures to get to the heart of the issue.  The worst part:  non-paying customers. 

We had a rash of accountant designed LLC's in Texas in the last few years.  It was very interesting to see the sometimes dramatic differences between the professions and the sometimes complete lack of public knowledge of the existence of legitimate disagreements between the groups. 

The best way to explain the difference is to tell a story from the first day of Torts class in law school.  After explaining an interesting fact pattern, the professor announces, "Everyone take out a blank sheet of paper and write down everything bad that could happen."  IMO, that is why attorney's minds are warped forever.   :-D

[Samwise]

TurboTax is my new best friend.  I just redid my taxes last night with it and came out $1000 ahead because it found deductions I'd missed.  Woohoo!

[El Gallo]

Don't forget to deduct those bunny ears as a business expense.

[Shockeye]

Don't forget to deduct those bunny ears as a business expense.

And the boob job.

[Samwise]

Don't hate me because I'm beautiful.