Tax Law (Questions About Taxes)/Rental Property Expenses

Advertisement


Question
Hello John!

Thanks in advance for being an expert.  

In 2015 we had a $2600 IRA withdrawl which put our AGI at $151,057.  Since our AGI went over $150K, we are now not allowed to deduct passive losses on our rental property.  Due to renovations on this property, we had losses of over $16K. So now we are scrambling to find ways to reduce our AGI by $1,057 dollars.

Is there anything we can do?   Due to our income, it appears making an IRA contribution won't help.  We also have a consulting LLC that was just started in Dec 2015.  We have enough startup expenses to offset the $1,057 in Jan-Feb 2016...can these be expensed somehow in 2015?

Do we have any options?  This $150K threshold is really sticking it to us :-)

Chris

Answer
Chris,

Thanks for your question.

You have very limited options at this point.

You state that the business had startup expenses. Normally those are not deductible as expenses but must be amortized over 180 months beginning in the month in which the business actually begins. You are allowed to expense a limited number of these, but again, it starts with the month business in begun. This might help http://www.bizfilings.com/toolkit/sbg/tax-info/fed-taxes/start-up-costs-and-orga

That probably won't help very much as the passive loss limitations start to phase out at $100,000. You lose $1 in deductions for every $2 of AGI above $100,000.

Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

All Answers


Answers by Expert:


Ask Experts

Volunteer


John Stancil, CPA

Expertise

I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

Publications
The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

©2016 About.com. All rights reserved.