What You Don’t Know Can Hurt You

Posted By: Larry Stone ICOR Blog & News ,

Real estate investors discuss this issue often.  Whether they are talking about mold hidden behind the walls or the use of the property as a meth lab, what you don’t know can seriously hurt you.  It is true in the financial world too.

Hopefully, your due diligence will detect the issue with the hidden mold and your strong contracts and background checks will prevent the meth lab scenario.  The question is do you apply the same due diligence to your tax situation?

Let us take a quick look at your awareness of select tax opportunities which were available to you:

  • Section 139 allows the business to deduct “qualified disaster relief” and it is not included in the employee’s taxable income
  • During 2020 and 2021, you can deduct 100% of business meals obtained from a restaurant or food service facility

You should have already known this information if you are properly following the changes in the tax code and its implementation.  Before you dismiss these concepts as too small to bother, remember that Vince Lombardi is known for lecturing the Green Bay Packers (Super Bowl Champions) on the first day of training by holding up a football and spending 2 hours talking about what it is.  He is known for stating that block and tackling (fundamentals) win the game.  Do you review your fundamentals every year to ensure that you are getting every benefit you can from the tax code?

It is not just the fundamentals that should be reviewed annually.  One of the “Top 10 Mistakes That Cost Real Estate Investors Thousands” is incorrect entity selection.  How does that happen?   Maybe they are not properly informed of all the alternatives and the tax benefits of each alternative when making their selection.  Or they may simply have outgrown the entity selection that they chose.  No matter what the reason for the arising of this mistake, it occurs very frequently.  We recommend a thorough review of your entity selection every year to ensure that it continues to be a best fit for you.

Things that matter such as your tax planning, asset protection and estate planning should be reviewed annually.  You don’t want to get hurt by what you don’t know and have that impact the things that really matter to you - whatever that may be such as educating your children, paying off your mortgage, building your retirement, and paying medical expenses.  

ICOR is sponsoring a two-day workshop to work on those things that matter to you.  It will begin with how to select your entity and maximize your benefits regarding tax reduction and asset protection.  We will discuss how to maintain your operating entity and address the fundamentals of reducing your taxes to accomplish your personal objectives such as funding your children’s education, paying medical bills, building your retirement fund, and increasing your cash flow.  To complete the event, we address the issues of exiting your business activity and transferring it to your family.  Join Eve Hoelzel - Farmers Insurance Agent, James Evans – Estate Planning Attorney and Larry Stone – CPA and Real Estate Tax Author and Speaker in their presentation called “Life Cycle of the Real Estate Investor” on May 1 and 2.  Go to www.icorockies.com to register for this event.