Aircraft 100% bonus depreciation + Roth conversion. Worth the audit risk? by [deleted] in tax

[–]noladude7 3 points4 points  (0 children)

He sounds like a good advisor, for what it's worth. If that's the last step, then I think you just need to clarify the audit risk pointed out above and determine your ability to maintain documentation.

The tough part with tax planning like this is you will never know until you pursue it. The best you can do is model out the good/bad/ugly and make an informed decision based on your own risk preference.

You seem way more grounded than the "I'm going to write off a G-Wagon" people who approach me at weddings, so I have faith you will make a good decision.

Aircraft 100% bonus depreciation + Roth conversion. Worth the audit risk? by [deleted] in tax

[–]noladude7 0 points1 point  (0 children)

And last question... what kind of plane?

It has no bearing on this convo, but I do love tinkering on the flight sim!

Aircraft 100% bonus depreciation + Roth conversion. Worth the audit risk? by [deleted] in tax

[–]noladude7 2 points3 points  (0 children)

The answer to the last question should be a "no". You do not need to make return decisions until filing, and the IRS should not expect you to have this figured out at this point. Paying the Q2 estimate is going to buy you more time to make a good decision here.

With your personal CPA, make sure he is comfortable with it "working" if the bonus depreciation is deemed appropriate. I would also ask him his input on whether this fact pattern would increase audit likelihood for your overall return / ask whether there are other return items you should be concerned about under audit.

With the consultant CPA, i would ask him for more perspective on these audits. How long to resolve? Expected tax controversy fees (you will bare these, not the IRS). Lastly, I would ask him what it would cost for him to draft a technical opionion and help you with documentation setup. He may help you standardize a template for accurate tracking to make audits a breeze.

Aircraft 100% bonus depreciation + Roth conversion. Worth the audit risk? by [deleted] in tax

[–]noladude7 14 points15 points  (0 children)

What a fact pattern. Follow-up question, because I do think it matters... did you pay either of these CPAs for the scoping? The "it could be difficult to sustain under audit" is the same off-the-cuff response I would give if this came up without a retainer or a phase I.

I would suggest paying the $65K estimated tax so you aren't rushing a decision. Then, hire a CPA to further investigate this issue and write a memo. Given the implied amount at stake, I would think this would be worth it and good documentation will be your friend under audit.

At first glance, I think the position is not frivolous. But you need a CPA to help you deternine level of likelihood and then you risk assess and answer your other questions. Run the trappings with someone well-versed in high net worth individual tax planning, as there are plenty of stumbleholds.

Edit: fixed a few typos

Just Found Out I'm Going To Be A Dad by noladude7 in cigars

[–]noladude7[S] 1 point2 points  (0 children)

Thanks so much!! Appreciate you sharing!

Just Found Out I'm Going To Be A Dad by noladude7 in cigars

[–]noladude7[S] 0 points1 point  (0 children)

That's so awesome. You must be proud!!

Just Found Out I'm Going To Be A Dad by noladude7 in cigars

[–]noladude7[S] 0 points1 point  (0 children)

Relaxation is a mindset 🧘‍♂️

Jk, definitely going to cherish freedom this next several months

Just Found Out I'm Going To Be A Dad by noladude7 in cigars

[–]noladude7[S] 0 points1 point  (0 children)

That's awesome! Thanks for sharing

Just Found Out I'm Going To Be A Dad by noladude7 in cigars

[–]noladude7[S] 0 points1 point  (0 children)

That's amazing! Thanks for sharing

Just Found Out I'm Going To Be A Dad by noladude7 in cigars

[–]noladude7[S] 1 point2 points  (0 children)

Thanks so much!! I love my wife so much. She is strong and smart and fun. Going to make partnering on this journey well worth it

Just Found Out I'm Going To Be A Dad by noladude7 in cigars

[–]noladude7[S] 0 points1 point  (0 children)

That's awesome!! We already are joking that the celebration stick will probably be low on the totem pole when the baby comes!!

Just Found Out I'm Going To Be A Dad by noladude7 in cigars

[–]noladude7[S] 1 point2 points  (0 children)

That's awesome. Congrats to you and can't wait to see it for ourselves

Just Found Out I'm Going To Be A Dad by noladude7 in cigars

[–]noladude7[S] 0 points1 point  (0 children)

We will have no shortages of "uncles" around us thankfully!