Michael Gray, CPA's Real Estate Tax Letter

July 10, 2018

© 2018 by Michael C. Gray
ISSN 1930-0387

A monthly report focusing on tax issues for the homeowner and real estate investor.

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The year is half over!

Time is sneaking by us again! How is 2018 going for you? Is there any way we can help you reach your goals? How is your tax picture shaping up this year? Call Thi Nguyen, CPA at 408-286-7400, extension 206 to make a planning appointment now.

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It's time for cleanup and extensions

Maybe you have an issue for which you would like a second look on the income tax returns you just filed. Maybe you have extended income tax returns that you need to have prepared. Or maybe you have some planning issues for which you need advice. To make an appointment, call Thi Nguyen, CPA at 408-286-7400, extension 206.

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My schedule.

I (Michael Gray) will be away from my office after July 10, returning on July 16.

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Special offers for updates of two of my books.

We have been hard at work getting our books updated for the Tax Cuts and Jobs Act of 2017, enacted last December and mostly effective at the beginning of 2018. Two books are now ready for you to order, and we are making them available to our subscribers for half price through July 31, 2018. They are the 2018 editions of Executive Tax Planning for Employee Stock Options at https://bit.ly/2KqJHfE and How to Use Roth and IRA Accounts to Build A Secure Retirement at https://bit.ly/2lQKk3q. Each of the books are priced the same at $14.99 plus $5.00 shipping and $1.85 California sales tax for California residents. Follow the links above to buy online using the coupon codes ESO2018 and ROTH2018, or call in your order to Dawn Siemer weekdays at 408-918-3162.

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Do you love travel?

I have created a Facebook travel group, called Travel Adventures, for members to share travel photos, experiences and tips. If you are on Facebook, you can use this URL to join: https://www.facebook.com/groups/207423476536726/, or search "Groups" on Facebook. You have to use the "join" button to join the group. This is a closed group, and I will approve your membership.

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Do you love Disney?

I have created a Facebook group, called Disney Magic, for members to share Disney photos, experiences and tips. I am also posting developments for Disney films, television shows, and amusement parks there. If you are on Facebook, you can use this URL to join: https://www.facebook.com/groups/2006739209578437/, or search "Groups" on Facebook. You have to use the "join" button to join the group. This is a closed group, and I will approve your membership.

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Apartment property manager was an employee.

The Tax Court upheld the IRS in determining the property manager of an apartment complex was an employee, and the owner of the apartment complex was liable for employment taxes plus penalties. The property manager received a regular salary of $2,000 per month, regardless of the number of hours worked. Vacation pay was included in the salary. The property manager was subject to the control of the owner, and worked at its direction. His duties included maintaining the property, collecting rent, advertising for and evaluating tenants, and evicting tenants.

The property manager worked for the owner of the apartment complex and the predecessor owner for more than 13 years.

The owner never issued a Form 1099-MISC for amounts paid the the property manager, so it wasn't eligible for relief under Section 530 of the Revenue Act of 1978.

(Hampton Software Development, LLC v. Commissioner, T.C. Memo. 2018-87, June 19, 2018.)

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More health insurance options for industry groups.

The Department of Labor has issued new regulations expanding the definitions of employers and employees for qualified association group medical plans. The regulations eliminate the requirement that a group or association acting as an employer to exist for purposes other than providing health benefits and permit the group or association to exist for the purpose, in whole or in part, of sponsoring a group health plan that it offers to its employer members.

The new regulations are expected to provide more medical insurance choices for groups like realtors, court stenographers, and other professionals.

We should be seeing more organizations formed just to provide group medical plans for specific industries in the near future.

(29 CFR Part 2510, RIN 1210-AB85, June 21, 2018.)

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IRS issues draft "postcard" Form 1040.

The IRS has issued a draft Form 1040 for 2018. The form eliminates a lot of information historically shown and moves it to schedules attached to the form. The form may be fulfilling a "political promise," but won't really simplify the tax reporting process. I'm afraid it will confuse many taxpayers.

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Loan commitment fees were currently deductible.

The IRS has issued field advice that quarterly commitment fees paid to secure a revolving line of credit didn't have to be capitalized. The fees were deductible in the year incurred.

(FSA 2018)

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Please share your good experiences with Michael Gray, CPA.

As you know, more and more people are going to the internet to find information about service providers. We hope you will share some good words about experiences that you have had with our firm. Some of the sites where you can share your experiences include yelp.com, siliconvalley.citysearch.com, and Google+.

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Financial Insider Weekly past episodes

After eight years of production, I have discontinued producing new interviews for Financial Insider Weekly. Doing the show has been a rewarding experience and I consider back episodes to be my legacy of financial literacy education to our community. Back episodes available at https://www.youtube.com/user/financialinsiderweek.

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Questions and Answers

Michael Gray regrets he can no longer personally answer email questions. He will answer selected questions in this newsletter.

Dear readers:

Many of your questions relate to the sale of a principal residence. We have an article at our web site, "Could your residence be the ultimate tax shelter?" (www.realestateinvestingtax.com/residence.shtml) where you should be able to find the answers to most of these questions.

Many other questions relate to short sales and foreclosures. See our article on that subject at www.realestateinvestingtax.com/shortsale.shtml.

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Follow me on Twitter, Facebook, LinkedIn and Google+!

If you enjoy Twitter, please follow me at www.twitter.com/michaelgraycpa. I would especially appreciate retweets of our messages announcing episodes of Financial Insider Weekly.

you can also follow me on other social media sites, Facebook, LinkedIn, and Google+.

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If you have employee stock options, have you subscribed to Michael Gray, CPA's Option Alert at no charge or obligation?

To learn more, visit stockoptionadvisors.com/subscribe.shtml

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Check out my blog.

I have also started a blog at michaelgraycpa.com. Check it out!

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Do you know about our other newsletters?

For general tax developments, tax planning ideas, business development ideas and book reviews, subscribe to Michael Gray, CPA's Tax & Business Insight at taxtrimmers.com/subscribe2.shtml.

Have employee stock options? Subscribe to our free newsletter, Michael Gray, CPA's Option Alert! To learn more, visit stockoptionadvisors.com/subscribe.shtml.

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Subscribe to the Real Estate Tax Letter

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Michael Gray, CPA
2482 Wooding Ct.
San Jose, CA 95128
(408) 918-3162
FAX: (408) 938-0610
Hours: 8am - 5pm PDT Monday - Friday

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