Sebastian’s Recent Posts

What Sources of Income are Subject to Double Taxation for Businesses?

Forming a business is usually a simple process that can be completed in a few minutes through your state’s Secretary of State website. 

Jun 8, 2023

Can You Change Title After a 1031 Exchange?

The 1031 exchange involves the exchange of relinquished real estate into replacement real estate, with the goal of potentially deferring taxes on capital gains. But rules need to be followed when completing a like-kind exchange to ensure that it’s valid to the IRS. One of these rules involves ownership of both the relinquished and replacement properties. 

Jun 2, 2023

What Are The Differences Between a Delaware Statutory Trust and a Partnership?

Real estate investors are frequently attracted to the potential benefits of commercial property but may lack the individual resources to buy the assets they want. As a result, these investors may pool their capital with other investors to gain access to more substantial properties to achieve their goals. One way to accomplish this is through the structure of a partnership, often a real estate limited partnership.

May 25, 2023

How Does a Step Up in Basis Work with a Qualified Opportunity Zone?

The purpose of the Qualified Opportunity Zone program is to direct some of the trillions in investors’ capital gains toward economic revitalization in federally designated Qualified Opportunity Zones. In response, those investors receive a bevy of potential tax deferral benefits. One of these benefits was the step-up in basis. We say “was” because the final basis step-up benefit came to an end on Dec. 31, 2021.

May 18, 2023

What Are the Qualifications for a Certified Exit Planning Advisor (CEPA)?

A Certified Exit Planning Advisor (CEPA) is a professional advisor with specialized training in helping business owners navigate transitioning out of their businesses. The goal is to maximize the value of their business and minimize risk during the exit process. 

May 14, 2023

What is an Example of Risk Management?

The Oxford Language Dictionary defines risk management as “the forecasting and evaluation of financial risks together with the identification of procedures to avoid or minimize their impact." That makes sense; investors routinely incorporate risk management into their decision-making process. Part of the task involves determining how much risk is acceptable (risk tolerance) since some people are willing to risk more in pursuit of a greater potential reward.

May 9, 2023

Can Opportunity Zones Be Expanded?

There were two parts to setting up the Opportunity Zones Program when it was introduced through the Tax Cuts and Jobs Act of 2017. The first was initiating guidance from both the IRS and U.S. Department of the Treasury. And the second was determining what would constitute appropriate Qualified Opportunity Zones for investment.

May 4, 2023

Who Takes Title In a 1031 Exchange?

In a typical 1031 exchange, an investor decides to sell a property and reinvest the proceeds. If the property has appreciated during the time the investor has owned it, they will be responsible for paying capital gains taxes on the increase in the fair market value. Assuming that the investor has held the asset for more than one year, the taxes will be assessed at the long-term capital gains rate, which is typically lower than the tax rate for ordinary income but can still be as much as 20 percent.

Apr 24, 2023

Is Installment Sale Income Subject to Net Investment Income Tax?

Higher earners, who meet certain thresholds, may be subject to the net investment income tax (NIIT). Those who have to pay the NIIT are slapped with a 3.8% tax on their net investment income or on the amount of modified adjusted gross income (MAGI) that exceeds the statutory threshold amount for your filing status. Basically, whichever of the two (investment income or MAGI) is the least amount will be subject to NIIT.

Apr 20, 2023

When is Pro Forma Performed by a Real Estate Investor?

Pro Forma is a term that pops up in real estate investing and other business discussions. Regarding real estate, a Pro Forma is typically thought of as a forward-looking estimate of financial opportunity. As a result, many real estate investors review the Pro Forma documentation to analyze the value of a potential acquisition.

Apr 15, 2023

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