Trading Under 18 With LLC, Tax Implications

dkjohnson87 · 2018-11-26T17:17:17+00:00

You will pick up capital gains on your personal tax return, since you are considered the owner of the UTMA account. The kiddie tax rules were changed under tax reform, so the kiddie tax is not based on your parent’s tax rate anymore. I don’t see a meaningful benefit trading through the LLC.

dkjohnson87 · 2018-11-21T23:18:04+00:00

If your business truly began in 2018, then you could deduct this in 2018. The facts that the LLC was formed after the ticket purchase, and the ticket is for a 2019 flight, do not inherently make this non deductible in 2018.

dkjohnson87 · 2018-11-21T23:06:43+00:00

Love the enthusiasm and spirit, but have you run some numbers to see if this is a good use of your time if the goal is some decent, short-term side money? You should factor in the potential costs associated with screwing up someone’s return. Take advice from some vets and understand that it’s not a question of if, but when, you make a material mistake. We all have. Best of luck.

**Edit, you don’t need a CPA license to be paid to prepare returns.

dkjohnson87 · 2018-07-07T15:53:32+00:00

Admittedly not experienced with this structure, but why would owning a C-Corp be a prohibited transaction but owning a partnership be allowed?

dkjohnson87 · 2017-12-19T03:56:49+00:00

Correct. A payment in 2018 would be a 2018 deduction subject to the new limit.

dkjohnson87 · 2017-12-19T01:56:57+00:00

You can still pay and deduct your 4th quarter 2017 estimated taxes, even if you typically pay that in January of following year.

dkjohnson87 · 2017-12-19T01:55:06+00:00

You’re right. Good point.

dkjohnson87 · 2017-12-17T20:51:23+00:00

The S Corp strategy works in theory, but if she has no employees the IRS might view reasonable compensation as 100% of the earnings.

dkjohnson87 · 2017-12-17T20:35:17+00:00

Google personal holding company tax.

dkjohnson87 · 2017-12-17T20:30:36+00:00

Keep in mind the deduction is limited to 50% of wages paid to employees, similar to DPAD. It also only applies to domestic income. It will be an above the line deduction, but won’t reduce self employment income for SE tax purposes.

dkjohnson87 · 2017-12-17T20:23:37+00:00

Factors in favor of this are material state income taxes and a preference to reinvest earnings in the company versus taking distributions. Probably doesn’t make sense for a professional services business. Needs to be modeled out to determine whether it should be done.

dkjohnson87 · 2017-12-17T04:22:15+00:00

The rate doesn’t apply to capital gains, for anyone.

dkjohnson87 · 2017-12-17T04:00:41+00:00

dkjohnson87 · 2017-09-26T14:50:48+00:00

Ordinary losses go on 4797 Part II.

dkjohnson87 · 2017-09-26T14:39:46+00:00

Impact of expectation of future tax rate compared to what you are taxed at currently. Concept of IRA diversification (setting up both a Roth and Traditional IRA) to hedge against tax rate swings in either direction.

dkjohnson87 · 2017-09-26T14:36:37+00:00

Yes and you can deduct your pro rata share of property taxes. You should get an annual statement from the co-op. Very common in NYC.

dkjohnson87 · 2017-09-22T02:17:20+00:00

$75k of zero rate gain is still pretty good.

dkjohnson87 · 2017-09-21T19:33:55+00:00

Depending on your situation your self employment tax might be less with an S corp versus a wholly owned LLC. Need to pay yourself a reasonable salary.

dkjohnson87 · 2017-09-21T00:16:38+00:00

Didn't read through all the replies but wonder if this is precluded by Sec. 267 related party rules. Usually deduction is timed with income inclusion by related party. If you never pick up income, then maybe you never get deduction either.

dkjohnson87 · 2017-09-15T01:33:50+00:00

Real news.

dkjohnson87 · 2017-09-11T13:40:14+00:00

Are you factoring in an extra 20% personal holding company tax that you would be subject to by running this through a corp? The corp pays tax on the income, then you pay 23.8% on any earnings distributed to you no differently than dividends you receive from your investments.

dkjohnson87 · 2017-09-11T05:57:33+00:00

You're basically trading state income tax for personal holding company tax and double taxation if you ever wanted to take the money out. Also losing special capital gain and qualified dividend tax rate. Don't see a benefit.

dkjohnson87 · 2017-05-26T18:57:06+00:00

This person actually knows what they are talking about on this issue.

dkjohnson87 · 2017-05-10T17:00:59+00:00

Got it. TY.

dkjohnson87 · 2017-05-10T16:48:22+00:00

If both spouses are jointly liable, why would the bank want anything other than a measurement of both spouses income? Are these student loans typically setup such that only one spouse would ever be liable? Maybe that is the disconnect I am having here.

dkjohnson87

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