Friend of mine was audited in his S Corp. His salary was deemed too low by California EDD. Reasonable compensation audits absolutely are happening in today's tax environment.
How about this. Labor is property. A dollar bill is property. You exchange labor for a dollar as a means of easier bartering. No profit or gains is realized. Therefore working for money is excluded income. Income is defined in the commercial code, which came from the old merchants code, and is based upon profits and gains from buying and reselling something.
Is there a way to take a 1031 exchange sale from an underperforming STR, invest in stocks and get into an annuity without paying a shit to of CGT? If so, I’m in
I plan on pulling the equity from my house to purchase a rental. How do i put that house and my current house into an S-Corp/LLC and rent from my s-corp/LLC?
If I w2 my grandchildren or place then on my BOD, will this have any bearing or impact on my daughters deductions? She counts on a big refund each year and I wouldn’t want to shoot her in the foot.
@jehuhand8176 you can request it to be backdated that far, but as far as I know, you need to have been on payroll, reasonable comp, during those years.
Really? Can you give a state as an example? Because the S-Corp election is an election made at the Federal level and S-Corps really are only a creature of the tax code. So I'd be surprised if a state law prevented a resident of a certain state from making the S-Corp election.
Isn't the flip side of depreciation that when the asset is sold years later, the amount of your depreciation becomes part of the profit margin and is taxable?
Yes. If you're cynical, the reason they hide this fact is because you will have paid them for 10+ years for their tax services before you decide to sell. If you assume they have your best interests at heart, then it's because they hope that you'll hold onto your assets until death. When your heirs receive the inheritance, the assets get a step-up in basis to today's market value rather than keeping the basis of when you purchased the assets (minus depreciation). The issue with this is that if a person wants to truly retire from everything (including "passive" real estate) at the of 65 and they live to 85...they are forced to hold onto the "passive" real estate for that 20+ year period (from ages 65-85+) to avoid taxes...and wait until they die to pass it onto their heirs
@@Alimoalem this could bite you or your heirs pretty hard if it was an appreciating asset like real estate. Assets that lose value over time though like vehicles and tools or equipment probably make this strategy useful.
My business has a Solo401k. I hired my spouse to run the office. I already maxxed out the employee contribution for the year. Doesn’t it make more sense to max out the spousal contribution before using the employer (25% profit sharing) contribution? Will I need to file a W2 for my spouse (100% 401k contributions in this case?)
If someone is on your Board, do they have to be an owner or even compensated at all? If I have two adult children and want to have my holiday time board meeting, can they be volunteer board members?
If I buy a auto and take bonus depreciation (or any for that matter), what if I sell it/trade it in a couple years down the line, what does the recapture look like to my bottom line tax obligation?
As an S-corp you should not pay yourself less than half of your income as salary and don't pay yourself less than the Social Security maximum taxable income as salary.
Hey Mark, recently got with one of your tax pros but I was not approached by any of these strategies to my business. Is there someone you can direct me with that can help?
What is the treatment of the health insurance deduction for a 2% or greater S-Corp shareholder Mark and Con-rlton? Forgot about this huh? Tell me more about the 15.3% SE Tax. What about the ability to deduct 50% of the SE Tax Mark and Con-rlton? Forgot about this huh? Not truly an effective rate of 15.3% (but why does that matter? - just get people to call you for short term tax planning)
I like most of what you say… BUT 1: back date the s Corp. no. You don’t actually qualify unless you intended to be and were operating as if you’re an s Corp. get away with it? 100%. But are you allowed to do it, no. 2: reasonable comp. Get away with what you’re saying? 100%. But is it correct? Absolutely not. Tax courts show a % of profit is not the definition of reasonable comp. You’re doing it wrong even though you’re getting away with it. I know you won’t change, but just bc you get away with doesn’t make it a valid strategy.
I used section 179 last year on my LLC. Can I add my wife to my LLC and utilize again for a 2nd vehicle or employee. Or can I buy another vehicle under another LLC with no income, and write it off against the one with income?
Wife doesn’t need to be on the LLC… as a spouse she can be an employee of the biz and get the same Bennie’s as YOU. So generally speaking, YES!! Also works the same for a solo 401k as well. HUGE DEDUCTIONS!!!!! $69k EACH PLUS $7k in a ROTH. Wooo woop!! Get booiiiiii!!!!!!
As a Big4 tax partner, (look up "Big 4" folks), karlton often provides incomolete and or aggressive strategies. For ex, he says he can write off a personal chef for most of his meals as "business expense" since he has kids, parents, other family members on payroll or in his board of directors. BS (check out jasmine dilucca for debunk). His "elect s status" to avoid SE Tax is very very short term....yes it saves some money now but long term it may be unwise.
You two are my most favorite people who are sharing tax knowledge online! 🎉
I love this collaboration. I found you both the same day. First Karlton then Mark. Thank you both!
Friend of mine was audited in his S Corp. His salary was deemed too low by California EDD. Reasonable compensation audits absolutely are happening in today's tax environment.
God bless you guys for these great life changing strategies and information 😊🙏🏼
Love when you two get together and tag team complicated issues into bite size solutions! 💪🏽
Yall are my kinda folks!
Does the automobile have to be bought brand new to use as a write-off in this way?
How about this.
Labor is property.
A dollar bill is property.
You exchange labor for a dollar as a means of easier bartering.
No profit or gains is realized.
Therefore working for money is excluded income.
Income is defined in the commercial code, which came from the old merchants code, and is based upon profits and gains from buying and reselling something.
Except there is property taxes😂
@aarondrew4076 , which is actually illegal according to our Founding Fathers.
Thanks great info from 2 Aces!
My accountant wants me to implement Augusta rule instead of going SCorp, thoughts?
Is there a way to take a 1031 exchange sale from an underperforming STR, invest in stocks and get into an annuity without paying a shit to of CGT? If so, I’m in
Enjoyed the video. Thanks for sharing
I plan on pulling the equity from my house to purchase a rental. How do i put that house and my current house into an S-Corp/LLC and rent from my s-corp/LLC?
If I w2 my grandchildren or place then on my BOD, will this have any bearing or impact on my daughters deductions? She counts on a big refund each year and I wouldn’t want to shoot her in the foot.
Can you cost seg a single family rental? I did a complete remodel on one 2 yrs ago.
Was this taped 2024 or 2023? Is there a way to backdate election to Jan 2023, from today (Oct 29, 2024) is no payroll filed in 2023?
Caught that as well. This was filmed 3 hrs ago. Had to been a slip, & meant 2024
I think you can go back 3 years and 75 days.
@jehuhand8176 you can request it to be backdated that far, but as far as I know, you need to have been on payroll, reasonable comp, during those years.
This was a live stream from last October.
Realtor in many states can not be an S-Corp because state regulations unless they hold a brokers license.
Really? Can you give a state as an example? Because the S-Corp election is an election made at the Federal level and S-Corps really are only a creature of the tax code. So I'd be surprised if a state law prevented a resident of a certain state from making the S-Corp election.
Isn't the flip side of depreciation that when the asset is sold years later, the amount of your depreciation becomes part of the profit margin and is taxable?
Yes.
If you're cynical, the reason they hide this fact is because you will have paid them for 10+ years for their tax services before you decide to sell.
If you assume they have your best interests at heart, then it's because they hope that you'll hold onto your assets until death. When your heirs receive the inheritance, the assets get a step-up in basis to today's market value rather than keeping the basis of when you purchased the assets (minus depreciation). The issue with this is that if a person wants to truly retire from everything (including "passive" real estate) at the of 65 and they live to 85...they are forced to hold onto the "passive" real estate for that 20+ year period (from ages 65-85+) to avoid taxes...and wait until they die to pass it onto their heirs
@@Alimoalem this could bite you or your heirs pretty hard if it was an appreciating asset like real estate. Assets that lose value over time though like vehicles and tools or equipment probably make this strategy useful.
Big supporter of these two goats 💪🏼
My business has a Solo401k. I hired my spouse to run the office. I already maxxed out the employee contribution for the year. Doesn’t it make more sense to max out the spousal contribution before using the employer (25% profit sharing) contribution?
Will I need to file a W2 for my spouse (100% 401k contributions in this case?)
If someone is on your Board, do they have to be an owner or even compensated at all? If I have two adult children and want to have my holiday time board meeting, can they be volunteer board members?
We have to consider the payroll cost at the same time!
why is the LLC income theshold $50,000 to convert to an SCorp?
Not much benefit in tax savings compared to the cost of opening/administrating, filing a tax return, setting up and processing payroll.
If I buy a auto and take bonus depreciation (or any for that matter), what if I sell it/trade it in a couple years down the line, what does the recapture look like to my bottom line tax obligation?
Mark got him at 29:45
How are they so smart and so handsome at the same time?
😂😂🎉
I know! 🎉
As an S-corp you should not pay yourself less than half of your income as salary and don't pay yourself less than the Social Security maximum taxable income as salary.
Good stuff....Thanks
Love it!
"WE LIKE TO PLAY SOME GAMES"....remember those words folks
Hey Mark, recently got with one of your tax pros but I was not approached by any of these strategies to my business. Is there someone you can direct me with that can help?
What is the treatment of the health insurance deduction for a 2% or greater S-Corp shareholder Mark and Con-rlton? Forgot about this huh? Tell me more about the 15.3% SE Tax. What about the ability to deduct 50% of the SE Tax Mark and Con-rlton? Forgot about this huh? Not truly an effective rate of 15.3% (but why does that matter? - just get people to call you for short term tax planning)
Can you s- corp from 1099 no llc.
What happened to Matt? Is he no longer at the firm?
I am 69 and was told I can't deposit into HSA anymore, ture?
Yep. HSA contributions end at 65-just when Medicare starts.
I like most of what you say… BUT
1: back date the s Corp. no. You don’t actually qualify unless you intended to be and were operating as if you’re an s Corp. get away with it? 100%. But are you allowed to do it, no.
2: reasonable comp. Get away with what you’re saying? 100%. But is it correct? Absolutely not. Tax courts show a % of profit is not the definition of reasonable comp. You’re doing it wrong even though you’re getting away with it.
I know you won’t change, but just bc you get away with doesn’t make it a valid strategy.
What happened to mentioning Carlton's masterclass??
This is from last year.
The day that people retire gets $800 a month, and ends living on the street !
Hahahahaha. That was awesome. Teenagers know everything hahahaha
I used section 179 last year on my LLC. Can I add my wife to my LLC and utilize again for a 2nd vehicle or employee.
Or can I buy another vehicle under another LLC with no income, and write it off against the one with income?
Wife doesn’t need to be on the LLC… as a spouse she can be an employee of the biz and get the same Bennie’s as YOU. So generally speaking, YES!! Also works the same for a solo 401k as well. HUGE DEDUCTIONS!!!!! $69k EACH PLUS $7k in a ROTH. Wooo woop!! Get booiiiiii!!!!!!
This guy's videos are often being debunked. This is sad to have this guy on your channel.
As a Big4 tax partner, (look up "Big 4" folks), karlton often provides incomolete and or aggressive strategies. For ex, he says he can write off a personal chef for most of his meals as "business expense" since he has kids, parents, other family members on payroll or in his board of directors. BS (check out jasmine dilucca for debunk). His "elect s status" to avoid SE Tax is very very short term....yes it saves some money now but long term it may be unwise.
Yeah no kidding!!!
Who’s debunked him? He sounds like he has great advice.
@@celianewman4809 I used to think the same, but CPA's routinely tear Karlton apart in his IG posts. It's embarrasing!
@@Jay-sy5yf But he’s giving the same advice as Mark. So Mark is wrong, too?