smreitz
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Posts posted by smreitz
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Your assumptions look fine to me. You are accomplishing income shifting.
The loan should be (1) documented with a loan agreement and payment schedule and (2) follow the IRS's AFR published rates to avoid IRS scrutiny.
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TwoCities is correct on both points.
The 401(k) loan could become taxable if you leave your job.
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Inspired by an old strategic card game of Winston Churchill and developed by Donald Rumsfeld...what? I will try the iphone version of the app out. Probably not a bad way to improve your probability mental models or burn some free time.
https://itunes.apple.com/us/app/churchill-solitaire/id1030804846?mt=8
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I grew up playing the Command and Conquer series (Red Alert, Tiberian Sun) and the Diablo series (which involves probabilities of luck with drops/loot %'s).
I am currently playing Fallout 4, which is very satisfying. The combat in the game can be played using the 'VATS' system which includes probabilities of damage based on your position/skills.
I also play a MMO game called 'Guild Wars 2', which features an extensive auction house system, which of course mimics any other electronic exchange. Some in-game items can cost hundreds of real world dollars!
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For those of you that are fans of 'Breaking Bad', this series brings a great intertwined story of the rise of industrial America including Vanderbilt, Rockefeller, Carnegie, Morgan, and Ford.
I am sure there are some historical inaccuracies, but it is really fun to watch the History Chanel incorporate some dramatic flare and blues guitar rifts to make this a 'sexy' history lesson.
http://www.history.com/shows/men-who-built-america
Available now on Netflix for instant viewing of Season 1.
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There have been some good comments on this topic. I will add the following points:
1. If you use a management company the activity for tax purposes will most be likely 'passive' in nature and thus any taxable loss you incur (which is most likely factoring in the non-cash expense of tax depreciation on the rental property) you will not be able to deduct on your current return (if you make above $150,000 of adjusted gross income and neither spouse meets the 'real estate professional' rules) and will be carried over to future years or until you ultimately sell the property and 'free-up' the losses.
2. The Federal Section 121 capital gain exclusion can still be used (even if you convert your old house into a rental). There are rules regarding this (qualifying and non-qualifying use), but bottom line is that 5 years after conversion (from home to rental property) the Section 121 gain exclusion is not applicable if you sell the property. Note that any tax depreciation claimed on the converted rental will ALWAYS be 'recaptured' and taxed at a higher rate (25%) and can not be reduced by the Section 121 gain exclusion, if applicable.
3. I think it would would be money well spent to sit down with a CPA or EA in your state to run some tax projections for you in addition to your own cash flow analysis to give yourself some more ammunition to make the best financial decision.
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The Most Important Thing -Howard Marks : Provides in under 200 pages, a crisp way of looking at what value investing with cycles and pendulum imagery.
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For your US Return, I can't speak to a Canadian return:
My advice would be to still file a Federal tax return (Form 1040) claiming the foreign tax credit (FTC) utilizing Form 1116. You can also claim the credit without preparing the Form 1116 (by making an election with your return) if you meet the requirements, however, making just the election would not allow you to carry forward any unused FTC to future years).
Purchase some basic tax software such as Turbo Tax and it will walk you through the process.
You can carry-back the unused FTC 1 year and forward 10.
http://www.irs.gov/uac/Form-1116,-Foreign-Tax-Credit
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The bike and cycling digs look 100% tax deductible to me.... :D
Glad he is staying active.
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Baupost Group (Klarman) opened new positions in:
1. OCN - Ocwen Financial Corp.
2. AR - Antero Resources
3. VRTV - Veritiv Corp.
He added positions largely in:
4. LNG - Cheniere Energy Inc.
5. KERX - Keryx Biopharmaceuticals Inc.
Reduced positions largely in:
6. BYD - Boyd Gaming Corp.
See below link for more detail:
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http://greatinvestors.tv/video/howard-marks-on-taking-the-high-road-in-business-and-investi.html
okay can anybody see what books are on Howard Mark's bookshelf? Tried zooming in and reading the titles but no luck. Thanks!
Thanks for posting.
Haha, I definitely see Howard's own book "The Most Important Thing", but can't see anything else clearly.
Maybe Howard is using some subliminal advertising???
Fight ON!
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If you have 20 minutes to burn watching a TED talk on Value Investing and Behavior Science I enjoyed the following:
-Spence
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Try out one of the personal finance online tracking sites (I'm 27 for reference).
After you enter your bank accounts/brokerage accounts, Mint tracks all inflows and outflows allowing you to categorize and tweak as necessary. It is an incredible online application.
Produced by Intuit, and allows you to track net worth, expenses, income etc....
I would highly recommended it after using it for over 3 years.
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Thank you for posting.
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You want Microsoft Office, so stick with a windows machine. The best options I have found out there to encompass the tablet/laptop combo into a viable yet portable system are:
1. Surface Pro 2 (with as much RAM memory you can get) - which many members have already recommended OR
2. Lenovo IdeaPad Yoga 2 Pro - this is a great tablet/laptop combo where the screen folds all the way around to convert from a regular laptop to a great tablet. It is highly rated on CNET where you can read a full review:
http://www.cnet.com/laptops/lenovo-ideapad-yoga-2/4505-3121_7-35827161.html
If you want to do work on a larger screen, just get an HDMI extension to your TV or larger monitor from the above choices. If you are not playing games or editing video/music, there is little use for the large non-movable desktop towers.
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Thought this was an interesting article on new fund to be conducted with a value investing philosophy:
“Prior to investing, we try to ’kill‘ the potential investment by running it through a 90 item investment checklist that is based on learning from the mistakes of great value-oriented investors such as Warren Buffett, Charlie Munger, Bruce Berkowitz, Seth Klarman, Mohnish Pabrai, Peter Lynch and more. This helps to rationalize our decision making and reduce risk,” said Pope Brar, Managing Partner and Founder of Brar Investment Capital LLC.To avoid the permanent loss of capital is our primary concern,” stated Pope Brar.The fund is suited for investors looking for capital appreciation through a concentrated portfolio of value oriented and special situation investments such as spin-offs, post-bankruptcy listings, restructurings, and rights offerings.
“In addition to reducing risk, investors are looking to grow their capital on an absolute basis and want to avoid investing in larger funds that closely track their benchmarks and deliver miniscule returns. One of the best ways to appreciate capital is by investing in a fund that concentrates holdings in a few names and reduces risk by continuously stress testing its investments by studying the mistakes of history’s greatest investors. Idea number 50 is unlikely to add more value than idea 20,” said Brar.
Brar Investment Fund LP will be available to accredited and qualified investors starting November 20, 2013.Original Article:
http://www.prweb.com/releases/2013/11/prweb11315909.htm
Comments? Anyone have an opinion on Bhupinder “Pope” Brar's past?
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Real estate professional (can deduct rental losses fully).
I would appreciate color from anyone with more knowledge of the above.
Does anyone have experience doing this? If there aren't specific standards set from the IRS, I'd be interested in comments from anyone who does this.
Do states with income taxes go with the IRS?
Real estate professionals must treat rental real estate activities in which they materially participate as non-passvise activities. Therefore, they can deduct these rental real estate losses from other non-passvie income. The $25,000 special allowance does not apply to these taxpayers.
Real estate professionals are individuals who meet both these conditions:
1. More than 50% of their personal services during the tax year are performed in real property trades or businesses in which they materially participate (Most individuals can meet material participation requirements by satisfying one of the seven testes discussed here: http://www.forbes.com/sites/robertwood/2012/02/02/why-material-participation-can-be-your-ticket-to-tax-deductions/) and,
2. They spend more than 750 hours of service during the year in real property trades or business in which they materially participate.
To meet the tests in items 1 and 2, above, taxpayers can elect to treat all interested in rental real estate as one activity. The election is made by filing a statement with the original return.
State income tax note: Check with your particular state whether they acquiesce with the Federal IRS's rules. For example, California does not fully conform.
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We are talking about totally different things.
I don't believe you specifically stated what it is that you are talking about -- I genuinely want to understand. I still think you're talking about the $125,000 household income ceiling, above which you can't deduct excess real estate expenses against your earned income.
Are you talking about something other than that?
For most individuals rental activities are passive and they cannot deduct the rental losses at any income level. The losses are carried over until there is passive income to offset the losses or the rental property is actually sold (the losses are 'freed-up').
Individuals can classify themselves as either:
a. Passive (see above);
b. Active (this is where the special $25,000 special allowance comes into play, see below);
c. Real estate professional (can deduct rental losses fully).
The above 3 categories have of course different requirements.
When individuals label themselves as active, meaning they own at least 10% of the rental property and have substantial involvement in managing the rental, they are allowed the special $25,000. The allowance is reduced by 50% of the amount by which the taxpayer's modified adjusted gross income (AGI) exceeds $100,000. Thus the allowance is reduced to zero when AGI reaches $150,000.
I hope that helps clarifies some of the issues discussed in the thread about the rental losses.
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I know for US taxpayers, the general rule states that they are 'cash basis' in the sense. If they have not constructively received access to use the income then it is not taxable (general rule).
OID interest is calculated in some cases, but the OID is suppose to increase your cost basis in the instrument so you are not subject to double taxation.
I would assume you are not taxed (yet) on the dividends in arrears.
If you want to make sure, you could contact the company to see if they issue tax forms (1099's) for shareholders in your situation.
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Good read. Thank you for posting.
Very macro oriented.
Mark quotes Seth Klarman pages 11 and 12.
Both seem to agree on the long term negative consequences of running up the US debt & low interest rates.
What are you buying today?
in General Discussion
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Powerball tickets... 8)