Do You Have A CPA Who Can Spell Real Estate If You Spot Him The R & E?
Posted @ 10:54 pm - Filed under 1031 Exchanges, Purposeful Planning, Investment Lessons, BawldGuy Axiom, Tax Shelter, IRS
Been talkin’ with a few new people this week who’ve paid the price for not understanding their investment portfolio as it relates to the IRS. Don’t wanna alarm anyone out there unnecessarily, but that ain’t a good sign.
CPA’s get a bad rap on so many levels. On one hand, they’re treated in some ways like doctors. Folks think doctors know everything medical. Same thing happens to CPA’s all the time. It’s unfair, grossly. Have you seen the Internal Revenue Code?
They’re constantly being cast in roles for which they’re poorly suited. If they don’t know the questions, how’re they gonna give you answers to questions you don’t know to ask? When it comes to real estate investing, there are precious few instances in which the taxpayer is allowed a do-over. Generally speaking, the IRS doesn’t have much of a sense of humor.
Make a mistake of ignorance in a tax deferred exchange? Tough luck — keep yer checkbook handy.
I could list half a dozen reasons why knowing what yer doin’ will either make or save you six figures — literally. Spoke with a woman today who was referred to me by a CPA in the midwest. After speaking with the accountant, it became obvious her previous accountant was working unarmed, so to speak.
Bottom line? She closed an exchange last July in which she could’ve benefitted from over $50,000 in tax free cash. Too late now. When I told her, all she did was sigh. That one mistake not only cost her the $50,000 tax free, but lowered the tax shelter she could’ve had for the next 4-7 years or so. Talk about a double barreled penalty. Roughly speaking, the tax savings she won’t have now, will total up to an additional $20,000 during the holding period. Ouch.
The IRS doesn’t care what you do or don’t know. They just care that what you end up reporting on your tax return is correct. There’s all kinds of ways to be correct with most IRS regs. Being correct while doing what’s best for you is the trick. Epiphany time?
BawldGuy Axiom: It’s rarely the answers to your questions that knock you down. It’s much more often the answers to the questions you didn’t know to ask that get ya.
BawldGuy Takeaway: If you wouldn’t ask a brain surgeon to rebuild your knee, why do you blindly trust your accountant to understand fairly sophisticated real estate tax law? It’s not fair to them, and it could very easily be financially toxic to you.
Back to the question asked in the title. Can your tax guy spell real estate?
Celebrate hump day by gettin’ my attention so we can chat. First thing? Figure out where you are now. Purposeful Planning can’t even begin until we know exactly where you are now. Have a good one.
This entry was posted on Tuesday, October 7th, 2008 at 10:54 pm and is filed under 1031 Exchanges, Purposeful Planning, Investment Lessons, BawldGuy Axiom, Tax Shelter, IRS. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.