Trying to lower tax on short term capital gains. Do conservation easements work?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
simas
Posts: 699
Joined: Wed Apr 04, 2007 5:50 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by simas » Tue May 05, 2020 8:57 am

mask107 wrote:
Mon May 04, 2020 4:59 pm
xraygoggles wrote:
Mon May 04, 2020 4:42 pm
Build a website, newsletter, social media, patreon, youtube etc.

Guaranteed you will find people to subscribe to your plan, whatever you call it. "I made 1.6M day-trading during covid crisis, and you can too!" or anything catchy.

No longer unemployed.

(For the taxes, just pay them and move on. Also un-sub from r/WSB).
I actually thought about doing that but some people are haters (i was bullied in high school and the bullies know where my family lives) and hate success and I do not want unneeded drama. Also, I do not want girls I have dated in the past to know I came up with a windfall. Plus a daytrader never shares his system or it will no longer work
there is also real personal risk and attention you are attracting if you start publishing this information - there is a reason (smarter) lottery winners
a) keep it quiet
b) move after winning

all worsts of unwanted characters coming to you for money is not even the worst that could happen.
I do not know if you are hearing recurring theme here at all- pay the tax, and start living your actual life. find something that you want/enjoy to do , find a place you want to live in (unless you are there already), find who you want to grow into , and get busy with it. live your life.

Lucky2Invest
Posts: 42
Joined: Wed Mar 23, 2016 6:07 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by Lucky2Invest » Wed May 06, 2020 12:04 pm

I am in same boat except not as much of a gain unfortunately...here is my plan I will be bringing my tax accountant.

Purchase investment property. In your case buy a $2MM property ASAP and use ACCELERATED DEPRECIATION to maximize losses. You could use a time frame of 3 years so theoretically you could have 666k in losses per year assuming you’re pretty much breaking even on operating. You can use this to offset your investment gains of 800k IF you qualify as a real estate professional. You can look up the qualifications for that but basic guidelines are you need to show you worked 850 hrs on real estate this year. I have heard from accountants who say they have never been challenged on the “real estate professional”.

I think of it as almost a 1031 exchange with stocks to real estate vs RE to RE.

So....would this work?

alfaspider
Posts: 2799
Joined: Wed Sep 09, 2015 4:44 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by alfaspider » Wed May 06, 2020 1:06 pm

Lucky2Invest wrote:
Wed May 06, 2020 12:04 pm
I am in same boat except not as much of a gain unfortunately...here is my plan I will be bringing my tax accountant.

Purchase investment property. In your case buy a $2MM property ASAP and use ACCELERATED DEPRECIATION to maximize losses. You could use a time frame of 3 years so theoretically you could have 666k in losses per year assuming you’re pretty much breaking even on operating. You can use this to offset your investment gains of 800k IF you qualify as a real estate professional. You can look up the qualifications for that but basic guidelines are you need to show you worked 850 hrs on real estate this year. I have heard from accountants who say they have never been challenged on the “real estate professional”.

I think of it as almost a 1031 exchange with stocks to real estate vs RE to RE.

So....would this work?
1) "Real estate professional" qualification is actually heavily audited and litigated.
2) Never undertake a tax strategy based on perceived audit risk
3) Keep in mind that accelerated depreciation is a timing benefit.
4) Only do this if you actually want to spend 850 hours (basically make it a full time job of yours for the rest of the year) AND want the economic exposure to real estate.
5) You may have trouble getting a mortgage for that much real estate if you have no income and no investment property track record.

Topic Author
mask107
Posts: 67
Joined: Thu Apr 13, 2017 5:54 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by mask107 » Wed May 06, 2020 3:30 pm

alfaspider wrote:
Wed May 06, 2020 1:06 pm
Lucky2Invest wrote:
Wed May 06, 2020 12:04 pm
I am in same boat except not as much of a gain unfortunately...here is my plan I will be bringing my tax accountant.

Purchase investment property. In your case buy a $2MM property ASAP and use ACCELERATED DEPRECIATION to maximize losses. You could use a time frame of 3 years so theoretically you could have 666k in losses per year assuming you’re pretty much breaking even on operating. You can use this to offset your investment gains of 800k IF you qualify as a real estate professional. You can look up the qualifications for that but basic guidelines are you need to show you worked 850 hrs on real estate this year. I have heard from accountants who say they have never been challenged on the “real estate professional”.

I think of it as almost a 1031 exchange with stocks to real estate vs RE to RE.

So....would this work?
1) "Real estate professional" qualification is actually heavily audited and litigated.
2) Never undertake a tax strategy based on perceived audit risk
3) Keep in mind that accelerated depreciation is a timing benefit.
4) Only do this if you actually want to spend 850 hours (basically make it a full time job of yours for the rest of the year) AND want the economic exposure to real estate.
5) You may have trouble getting a mortgage for that much real estate if you have no income and no investment property track record.
I am not a real estate professional though and I do not have 2 million of capital to invest in RE. I only have 1.2 mill. And don't you see RE crashing soon due to recession? Seems like I would lose more money than I would save?

alfaspider
Posts: 2799
Joined: Wed Sep 09, 2015 4:44 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by alfaspider » Wed May 06, 2020 3:36 pm

mask107 wrote:
Wed May 06, 2020 3:30 pm
alfaspider wrote:
Wed May 06, 2020 1:06 pm
Lucky2Invest wrote:
Wed May 06, 2020 12:04 pm
I am in same boat except not as much of a gain unfortunately...here is my plan I will be bringing my tax accountant.

Purchase investment property. In your case buy a $2MM property ASAP and use ACCELERATED DEPRECIATION to maximize losses. You could use a time frame of 3 years so theoretically you could have 666k in losses per year assuming you’re pretty much breaking even on operating. You can use this to offset your investment gains of 800k IF you qualify as a real estate professional. You can look up the qualifications for that but basic guidelines are you need to show you worked 850 hrs on real estate this year. I have heard from accountants who say they have never been challenged on the “real estate professional”.

I think of it as almost a 1031 exchange with stocks to real estate vs RE to RE.

So....would this work?
1) "Real estate professional" qualification is actually heavily audited and litigated.
2) Never undertake a tax strategy based on perceived audit risk
3) Keep in mind that accelerated depreciation is a timing benefit.
4) Only do this if you actually want to spend 850 hours (basically make it a full time job of yours for the rest of the year) AND want the economic exposure to real estate.
5) You may have trouble getting a mortgage for that much real estate if you have no income and no investment property track record.
I am not a real estate professional though and I do not have 2 million of capital to invest in RE. I only have 1.2 mill. And don't you see RE crashing soon due to recession? Seems like I would lose more money than I would save?
And again, even if the investment ends up being a good one, you don't actually save money on tax unless you defer realization indefinitely (which means staying invested in that amount of real estate indefinitely). There is depreciation recapture when you sell. Yes, money has a time value and deferral has a real benefit, but it's not a free lunch- none exists in the tax world.

Topic Author
mask107
Posts: 67
Joined: Thu Apr 13, 2017 5:54 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by mask107 » Wed May 06, 2020 3:38 pm

alfaspider wrote:
Wed May 06, 2020 3:36 pm
mask107 wrote:
Wed May 06, 2020 3:30 pm
alfaspider wrote:
Wed May 06, 2020 1:06 pm
Lucky2Invest wrote:
Wed May 06, 2020 12:04 pm
I am in same boat except not as much of a gain unfortunately...here is my plan I will be bringing my tax accountant.

Purchase investment property. In your case buy a $2MM property ASAP and use ACCELERATED DEPRECIATION to maximize losses. You could use a time frame of 3 years so theoretically you could have 666k in losses per year assuming you’re pretty much breaking even on operating. You can use this to offset your investment gains of 800k IF you qualify as a real estate professional. You can look up the qualifications for that but basic guidelines are you need to show you worked 850 hrs on real estate this year. I have heard from accountants who say they have never been challenged on the “real estate professional”.

I think of it as almost a 1031 exchange with stocks to real estate vs RE to RE.

So....would this work?
1) "Real estate professional" qualification is actually heavily audited and litigated.
2) Never undertake a tax strategy based on perceived audit risk
3) Keep in mind that accelerated depreciation is a timing benefit.
4) Only do this if you actually want to spend 850 hours (basically make it a full time job of yours for the rest of the year) AND want the economic exposure to real estate.
5) You may have trouble getting a mortgage for that much real estate if you have no income and no investment property track record.
I am not a real estate professional though and I do not have 2 million of capital to invest in RE. I only have 1.2 mill. And don't you see RE crashing soon due to recession? Seems like I would lose more money than I would save?
And again, even if the investment ends up being a good one, you don't actually save money on tax unless you defer realization indefinitely (which means staying invested in that amount of real estate indefinitely). There is depreciation recapture when you sell. Yes, money has a time value and deferral has a real benefit, but it's not a free lunch- none exists in the tax world.
So basically after making this topic, I will most likely just pay the full tax and move on my merry way. Seems like many people mention don't let the tail wag the dog and it seems like most of these methods you would spend more than what you get out of it

core4portfolio
Posts: 535
Joined: Thu Dec 26, 2013 2:12 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by core4portfolio » Wed May 06, 2020 3:45 pm

OP,

Pay tax and enjoy the gain. If I lose job due to pandemic then I will get some training from you to do trading..
Mind sharing...Whats the percentage of your profit ?
Allocation : 80/20 (80% TSM, 20% TBM) | Need to learn fishing sooner

Topic Author
mask107
Posts: 67
Joined: Thu Apr 13, 2017 5:54 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by mask107 » Wed May 06, 2020 4:12 pm

core4portfolio wrote:
Wed May 06, 2020 3:45 pm
OP,

Pay tax and enjoy the gain. If I lose job due to pandemic then I will get some training from you to do trading..
Mind sharing...Whats the percentage of your profit ?
Right now I am at 900%. Using 4 times margin but all cash right now. Looking at opportunities to park my cash for now

core4portfolio
Posts: 535
Joined: Thu Dec 26, 2013 2:12 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by core4portfolio » Wed May 06, 2020 4:49 pm

Thanks for responding. I couldnt understood this margin concepts for long time. i will read it up some time in udemy.
Congrats on such a huge gain :). You reminded me a long time internet friend named dosuxx in fatwallet site, went to work for wall street by showing his trade success to wall street company as trader.
You can try that approach if you wish....
Allocation : 80/20 (80% TSM, 20% TBM) | Need to learn fishing sooner

inbox788
Posts: 7127
Joined: Thu Mar 15, 2012 5:24 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by inbox788 » Wed May 06, 2020 11:55 pm

mask107 wrote:
Wed May 06, 2020 4:12 pm
core4portfolio wrote:
Wed May 06, 2020 3:45 pm
OP,

Pay tax and enjoy the gain. If I lose job due to pandemic then I will get some training from you to do trading..
Mind sharing...Whats the percentage of your profit ?
Right now I am at 900%. Using 4 times margin but all cash right now. Looking at opportunities to park my cash for now
What are you trading? Futures? How long are you holding positions? Minutes? Hours? Overnight?

Careful with risk management. Sounds like 4x margin is taking big chances. He who lives by the margin grade...

Topic Author
mask107
Posts: 67
Joined: Thu Apr 13, 2017 5:54 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by mask107 » Thu May 07, 2020 12:23 am

inbox788 wrote:
Wed May 06, 2020 11:55 pm
mask107 wrote:
Wed May 06, 2020 4:12 pm
core4portfolio wrote:
Wed May 06, 2020 3:45 pm
OP,

Pay tax and enjoy the gain. If I lose job due to pandemic then I will get some training from you to do trading..
Mind sharing...Whats the percentage of your profit ?
Right now I am at 900%. Using 4 times margin but all cash right now. Looking at opportunities to park my cash for now
What are you trading? Futures? How long are you holding positions? Minutes? Hours? Overnight?

Careful with risk management. Sounds like 4x margin is taking big chances. He who lives by the margin grade...
Just regular equities. I was holding overnight before but now enter and exit quickly

inbox788
Posts: 7127
Joined: Thu Mar 15, 2012 5:24 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by inbox788 » Thu May 07, 2020 12:51 am

mask107 wrote:
Thu May 07, 2020 12:23 am
Just regular equities. I was holding overnight before but now enter and exit quickly
How do you get more than 2x margins with equities?

Topic Author
mask107
Posts: 67
Joined: Thu Apr 13, 2017 5:54 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by mask107 » Thu May 07, 2020 2:16 am

inbox788 wrote:
Thu May 07, 2020 12:51 am
mask107 wrote:
Thu May 07, 2020 12:23 am
Just regular equities. I was holding overnight before but now enter and exit quickly
How do you get more than 2x margins with equities?
Daytrading buying power is 4x. By the way, don't join any chatrooms or pay anyone to teach you trading. This is a competitive field, and anyone who has an advantage will not share it. Those who do, do so because they do not make money trading and make all of their income from charging chatrooms to unsuspecting beginners. Since you guys have helped me out, that is my advice I want to give you all

Lucky2Invest
Posts: 42
Joined: Wed Mar 23, 2016 6:07 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by Lucky2Invest » Thu May 07, 2020 8:59 am

mask107 wrote:
Wed May 06, 2020 3:30 pm
alfaspider wrote:
Wed May 06, 2020 1:06 pm
Lucky2Invest wrote:
Wed May 06, 2020 12:04 pm
I am in same boat except not as much of a gain unfortunately...here is my plan I will be bringing my tax accountant.

Purchase investment property. In your case buy a $2MM property ASAP and use ACCELERATED DEPRECIATION to maximize losses. You could use a time frame of 3 years so theoretically you could have 666k in losses per year assuming you’re pretty much breaking even on operating. You can use this to offset your investment gains of 800k IF you qualify as a real estate professional. You can look up the qualifications for that but basic guidelines are you need to show you worked 850 hrs on real estate this year. I have heard from accountants who say they have never been challenged on the “real estate professional”.

I think of it as almost a 1031 exchange with stocks to real estate vs RE to RE.

So....would this work?
1) "Real estate professional" qualification is actually heavily audited and litigated.
2) Never undertake a tax strategy based on perceived audit risk
3) Keep in mind that accelerated depreciation is a timing benefit.
4) Only do this if you actually want to spend 850 hours (basically make it a full time job of yours for the rest of the year) AND want the economic exposure to real estate.
5) You may have trouble getting a mortgage for that much real estate if you have no income and no investment property track record.
I am not a real estate professional though and I do not have 2 million of capital to invest in RE. I only have 1.2 mill. And don't you see RE crashing soon due to recession? Seems like I would lose more money than I would save?
I realize that but for $800k I would bust my ass for the rest of the year to make myself a real estate professional. It’s an arbitrary title where you just need to show that you have put a lot (850 hrs) into real estate. My contacts said it’s never challenged, it sounds like other people have seen it challenged. But just work the 850 and you don’t need to worry about it. You don’t need to put $2mm down. Put the minimum down needed to depreciate the full tax bill in the first year, probably something like $650k.

Think of it this way. You pay the $800k it’s gone forever. Instead you buy an appreciating asset with the money you were going to pay in taxes. Yes it requires work and who knows where real estate is going but it’s certainly not going to zero which is where your $800k is going when you pay taxes.

I thought I read you didn’t have a job and were just day trading. This is a fairly simple solution to save $800k while at the same time diversifying your investments.

Topic Author
mask107
Posts: 67
Joined: Thu Apr 13, 2017 5:54 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by mask107 » Thu May 07, 2020 10:57 am

Lucky2Invest wrote:
Thu May 07, 2020 8:59 am
mask107 wrote:
Wed May 06, 2020 3:30 pm
alfaspider wrote:
Wed May 06, 2020 1:06 pm
Lucky2Invest wrote:
Wed May 06, 2020 12:04 pm
I am in same boat except not as much of a gain unfortunately...here is my plan I will be bringing my tax accountant.

Purchase investment property. In your case buy a $2MM property ASAP and use ACCELERATED DEPRECIATION to maximize losses. You could use a time frame of 3 years so theoretically you could have 666k in losses per year assuming you’re pretty much breaking even on operating. You can use this to offset your investment gains of 800k IF you qualify as a real estate professional. You can look up the qualifications for that but basic guidelines are you need to show you worked 850 hrs on real estate this year. I have heard from accountants who say they have never been challenged on the “real estate professional”.

I think of it as almost a 1031 exchange with stocks to real estate vs RE to RE.

So....would this work?
1) "Real estate professional" qualification is actually heavily audited and litigated.
2) Never undertake a tax strategy based on perceived audit risk
3) Keep in mind that accelerated depreciation is a timing benefit.
4) Only do this if you actually want to spend 850 hours (basically make it a full time job of yours for the rest of the year) AND want the economic exposure to real estate.
5) You may have trouble getting a mortgage for that much real estate if you have no income and no investment property track record.
I am not a real estate professional though and I do not have 2 million of capital to invest in RE. I only have 1.2 mill. And don't you see RE crashing soon due to recession? Seems like I would lose more money than I would save?
I realize that but for $800k I would bust my ass for the rest of the year to make myself a real estate professional. It’s an arbitrary title where you just need to show that you have put a lot (850 hrs) into real estate. My contacts said it’s never challenged, it sounds like other people have seen it challenged. But just work the 850 and you don’t need to worry about it. You don’t need to put $2mm down. Put the minimum down needed to depreciate the full tax bill in the first year, probably something like $650k.

Think of it this way. You pay the $800k it’s gone forever. Instead you buy an appreciating asset with the money you were going to pay in taxes. Yes it requires work and who knows where real estate is going but it’s certainly not going to zero which is where your $800k is going when you pay taxes.

I thought I read you didn’t have a job and were just day trading. This is a fairly simple solution to save $800k while at the same time diversifying your investments.
Do I have to set up an entity?

inbox788
Posts: 7127
Joined: Thu Mar 15, 2012 5:24 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by inbox788 » Thu May 07, 2020 11:15 am

mask107 wrote:
Thu May 07, 2020 2:16 am
Daytrading buying power is 4x. By the way, don't join any chatrooms or pay anyone to teach you trading. This is a competitive field, and anyone who has an advantage will not share it. Those who do, do so because they do not make money trading and make all of their income from charging chatrooms to unsuspecting beginners. Since you guys have helped me out, that is my advice I want to give you all
Ah, makes sense, but leverage risk is still significant. Trading is always competitive and you're going up against the professionals and nowadays the machines, so good luck. I look forward to seeing how you do the next few years and if your secrets are sustainable. Most folk here are happy with reversion to the mean; the antithesis of what you're doing.

The strategy to turn your short term capital gains to a real estate play is promising, but requires a big commitment.

Lucky2Invest
Posts: 42
Joined: Wed Mar 23, 2016 6:07 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by Lucky2Invest » Thu May 07, 2020 12:57 pm

mask107 wrote:
Thu May 07, 2020 10:57 am
Lucky2Invest wrote:
Thu May 07, 2020 8:59 am
mask107 wrote:
Wed May 06, 2020 3:30 pm
alfaspider wrote:
Wed May 06, 2020 1:06 pm
Lucky2Invest wrote:
Wed May 06, 2020 12:04 pm
I am in same boat except not as much of a gain unfortunately...here is my plan I will be bringing my tax accountant.

Purchase investment property. In your case buy a $2MM property ASAP and use ACCELERATED DEPRECIATION to maximize losses. You could use a time frame of 3 years so theoretically you could have 666k in losses per year assuming you’re pretty much breaking even on operating. You can use this to offset your investment gains of 800k IF you qualify as a real estate professional. You can look up the qualifications for that but basic guidelines are you need to show you worked 850 hrs on real estate this year. I have heard from accountants who say they have never been challenged on the “real estate professional”.

I think of it as almost a 1031 exchange with stocks to real estate vs RE to RE.

So....would this work?
1) "Real estate professional" qualification is actually heavily audited and litigated.
2) Never undertake a tax strategy based on perceived audit risk
3) Keep in mind that accelerated depreciation is a timing benefit.
4) Only do this if you actually want to spend 850 hours (basically make it a full time job of yours for the rest of the year) AND want the economic exposure to real estate.
5) You may have trouble getting a mortgage for that much real estate if you have no income and no investment property track record.
I am not a real estate professional though and I do not have 2 million of capital to invest in RE. I only have 1.2 mill. And don't you see RE crashing soon due to recession? Seems like I would lose more money than I would save?
I realize that but for $800k I would bust my ass for the rest of the year to make myself a real estate professional. It’s an arbitrary title where you just need to show that you have put a lot (850 hrs) into real estate. My contacts said it’s never challenged, it sounds like other people have seen it challenged. But just work the 850 and you don’t need to worry about it. You don’t need to put $2mm down. Put the minimum down needed to depreciate the full tax bill in the first year, probably something like $650k.

Think of it this way. You pay the $800k it’s gone forever. Instead you buy an appreciating asset with the money you were going to pay in taxes. Yes it requires work and who knows where real estate is going but it’s certainly not going to zero which is where your $800k is going when you pay taxes.

I thought I read you didn’t have a job and were just day trading. This is a fairly simple solution to save $800k while at the same time diversifying your investments.
Do I have to set up an entity?
It is a pass through so I believe you do but check with your accountant. I buy all of my rental properties in LLC's anyways as an added layer of protection so might as well. It takes 30 minutes to create an LLC online nowadays.

I personally couldn't imagine paying 800K in taxes when there is a pretty "simple" solution that has been gifted just two weeks ago by the President to get you out of this. And yes, it will require some work. Buy the property and change a few lightbulbs, collect rent and manage the books until the end of the year and you're all set. Next year hire a property manager and forget about the property for the next 20 years and just collect rent.

Read link below to find out more about this and see why it is so heavily scrutinized.

https://itep.org/the-cares-act-provisio ... and-worse/

Topic Author
mask107
Posts: 67
Joined: Thu Apr 13, 2017 5:54 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by mask107 » Thu May 07, 2020 1:34 pm

Lucky2Invest wrote:
Thu May 07, 2020 12:57 pm
mask107 wrote:
Thu May 07, 2020 10:57 am
Lucky2Invest wrote:
Thu May 07, 2020 8:59 am
mask107 wrote:
Wed May 06, 2020 3:30 pm
alfaspider wrote:
Wed May 06, 2020 1:06 pm


1) "Real estate professional" qualification is actually heavily audited and litigated.
2) Never undertake a tax strategy based on perceived audit risk
3) Keep in mind that accelerated depreciation is a timing benefit.
4) Only do this if you actually want to spend 850 hours (basically make it a full time job of yours for the rest of the year) AND want the economic exposure to real estate.
5) You may have trouble getting a mortgage for that much real estate if you have no income and no investment property track record.
I am not a real estate professional though and I do not have 2 million of capital to invest in RE. I only have 1.2 mill. And don't you see RE crashing soon due to recession? Seems like I would lose more money than I would save?
I realize that but for $800k I would bust my ass for the rest of the year to make myself a real estate professional. It’s an arbitrary title where you just need to show that you have put a lot (850 hrs) into real estate. My contacts said it’s never challenged, it sounds like other people have seen it challenged. But just work the 850 and you don’t need to worry about it. You don’t need to put $2mm down. Put the minimum down needed to depreciate the full tax bill in the first year, probably something like $650k.

Think of it this way. You pay the $800k it’s gone forever. Instead you buy an appreciating asset with the money you were going to pay in taxes. Yes it requires work and who knows where real estate is going but it’s certainly not going to zero which is where your $800k is going when you pay taxes.

I thought I read you didn’t have a job and were just day trading. This is a fairly simple solution to save $800k while at the same time diversifying your investments.
Do I have to set up an entity?
It is a pass through so I believe you do but check with your accountant. I buy all of my rental properties in LLC's anyways as an added layer of protection so might as well. It takes 30 minutes to create an LLC online nowadays.

I personally couldn't imagine paying 800K in taxes when there is a pretty "simple" solution that has been gifted just two weeks ago by the President to get you out of this. And yes, it will require some work. Buy the property and change a few lightbulbs, collect rent and manage the books until the end of the year and you're all set. Next year hire a property manager and forget about the property for the next 20 years and just collect rent.

Read link below to find out more about this and see why it is so heavily scrutinized.

https://itep.org/the-cares-act-provisio ... and-worse/
So I do not need a RE license? You mentioned I should do this asap, is there a reason why? When does my 850 hours start? After I buy my first property? And what tasks count against the 850 hours? Thanks for everything

I also know nothing about real estate, and since I do not have a job, I would have to pay in full cash for the house right since no one would approve me for a loan? So I can only buy 1.2 million worth of house without any loans or leverage? Can I still deduct 800k worth due to this

Lucky2Invest
Posts: 42
Joined: Wed Mar 23, 2016 6:07 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by Lucky2Invest » Thu May 07, 2020 4:33 pm

I don't pretend to know enough to take my word for thism so please find a good lawyer, AS I AM ABOUT TO ALSO, who can help you with this.

You don't need a RE license. Read the link below with more information. I was wrong... it's actually 750 not 850 hours. This includes management, acquisition, conversion, rental, operations, etc. Pretty much any work you do for your property whether you're answering tenants questions, depositing checks or changing a light bulb. I'm not sure if you can count hours finding a property, but they do list acquisition...I have several rentals so I'm not in as much of a rush to hit the 750.

I say do it quick because you are running out of time. It's going to take a few months to close on a property. On Dec 31 if you don't have these passive losses (depreciation) you are going to have a HUGE tax bill on your day trading. There is a ton to unpack in the Cares Act and how it pertains to this. Specifically there is a section on carrying loses to previous years(link below) which could help you immensely but again, I'm not sure I'm reading that correctly.

My main question/concern is accelerated depreciation. How accelerated can you get on this? Is

https://www.blueandco.com/do-your-renta ... x-purposes

https://www.mwe.com/insights/cares-act- ... -industry/

inbox788
Posts: 7127
Joined: Thu Mar 15, 2012 5:24 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by inbox788 » Thu May 07, 2020 5:21 pm

Seems like a straight forward strategy would be to work on your realtor license. You don't need to ask for a lot of pay, not that realtors get paid by the hour, but if you even got minimum wage, it would help document the hours.

You could do open houses and rack up a lot of time, or hire an assistant to help you, while you supervise from afar. And I would think hiring more assistants may be viewed favorably. Some brokers may not like that, but others may not care if it doesn't cost them much or help facilitate sales. I don't think a lot of sales are made at these open houses, but they simply provide exposure and leads.

https://www.biggerpockets.com/blog/real ... y-on-taxes

jacoavlu
Posts: 982
Joined: Sun Jan 06, 2013 12:06 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by jacoavlu » Thu May 07, 2020 5:42 pm

Did I miss it?

I still haven’t heard what the estimated actual tax liability is.

If you have $1.2M I don’t see $800k tax.

If STCG is $800k realized, tax number is going to be much less than 50% of that number.

Lucky2Invest
Posts: 42
Joined: Wed Mar 23, 2016 6:07 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by Lucky2Invest » Thu May 07, 2020 6:34 pm

I was going off $800k in short term cap gains tax. But if it’s a gain of $800k and STCG on that it really doesn’t change the strategy here. It’s still a significant amount of money.

The problem I see is it’s going to be difficult to do 750 hrs of work by the end of the year by the time he closes on a property. It’s certainly possible if he buys a rehab rental and puts in 2 months of hard work...he gets there real quick.

Topic Author
mask107
Posts: 67
Joined: Thu Apr 13, 2017 5:54 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by mask107 » Thu May 07, 2020 6:54 pm

Lucky2Invest wrote:
Thu May 07, 2020 6:34 pm
I was going off $800k in short term cap gains tax. But if it’s a gain of $800k and STCG on that it really doesn’t change the strategy here. It’s still a significant amount of money.

The problem I see is it’s going to be difficult to do 750 hrs of work by the end of the year by the time he closes on a property. It’s certainly possible if he buys a rehab rental and puts in 2 months of hard work...he gets there real quick.

What is the maximum house I can buy with $1.2 million sitting there? Can I buy a $4 million rental and depreciate it rapidly to cancel out the 800k gain? I am so confused

Can I work on my real estate license now and count that towards the 750 hours while I am looking at a house to purchase? So once the house is closed I have like 300 hours under my belt?
Last edited by mask107 on Thu May 07, 2020 7:02 pm, edited 1 time in total.

MarkNYC
Posts: 1762
Joined: Mon May 05, 2008 7:58 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by MarkNYC » Thu May 07, 2020 6:59 pm

Lucky2Invest wrote:
Thu May 07, 2020 8:59 am
mask107 wrote:
Wed May 06, 2020 3:30 pm

I am not a real estate professional though and I do not have 2 million of capital to invest in RE. I only have 1.2 mill. And don't you see RE crashing soon due to recession? Seems like I would lose more money than I would save?
I realize that but for $800k I would bust my ass for the rest of the year to make myself a real estate professional. It’s an arbitrary title where you just need to show that you have put a lot (850 hrs) into real estate. My contacts said it’s never challenged, it sounds like other people have seen it challenged. But just work the 850 and you don’t need to worry about it. You don’t need to put $2mm down. Put the minimum down needed to depreciate the full tax bill in the first year, probably something like $650k.

Think of it this way. You pay the $800k it’s gone forever. Instead you buy an appreciating asset with the money you were going to pay in taxes. Yes it requires work and who knows where real estate is going but it’s certainly not going to zero which is where your $800k is going when you pay taxes.

I thought I read you didn’t have a job and were just day trading. This is a fairly simple solution to save $800k while at the same time diversifying your investments.
I think your repeated advice to the OP to buy an investment property in order to offset the current-year tax on his trading gains is impractical, uninformed, and certainly not simple.

First, the amount of tax the OP is trying to defer or offset is not $800K. He has realized gains of $800K, so the tax is closer to $300K, not $800K.

To qualify as a real estate professional, he would have to perform at least 750 hours during 2020 in the operation of a real estate activity in which he materially participates. Assuming he could buy a property and place it in service by July 1, he would then need to spend at least 6 hours a day, 5 days/week for the rest of the year on the real estate activity to qualify, and be able to document the hours. This, for a guy who knows nothing about real estate, has expressed no interest in owning/operating real estate, and has spent the last 8 years as a day-trader? I think his chances of qualifying as a RE professional for 2020 are slim and none.

In the unlikely chance he qualifies as a RE professional for 2020, how much will he benefit? For residential real estate, the land is not depreciated, and the building is depreciated on a straight-line basis over 27.5 years. There is no "accelerated depreciation" allowed. Something called "bonus depreciation" is allowed for certain types of property with a depreciation life of less than 20 years, such as machinery, equipment, landscaping, etc., and bonus depreciation eligible property can get a 100% depreciation deduction in the first year. The taxpayer could have a cost segregation analysis done to determine how much of the total purchase, or building components might qualify for bonus depreciation, but it's not likely to be a significant amount. The likely result is that his total rental loss for 2020 is relatively small - only a small fraction of the $800K capital gains from trading.

Without a job, the OP cannot get a loan to buy the property. So the OP should think long and hard before using his entire $1.2M liquid net worth to buy an investment property thinking that the investment property loss in 2020 will fully or significantly defer the the tax on his $800K trading gains realized in 2020.

Topic Author
mask107
Posts: 67
Joined: Thu Apr 13, 2017 5:54 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by mask107 » Thu May 07, 2020 7:10 pm

MarkNYC wrote:
Thu May 07, 2020 6:59 pm
Lucky2Invest wrote:
Thu May 07, 2020 8:59 am
mask107 wrote:
Wed May 06, 2020 3:30 pm

I am not a real estate professional though and I do not have 2 million of capital to invest in RE. I only have 1.2 mill. And don't you see RE crashing soon due to recession? Seems like I would lose more money than I would save?
I realize that but for $800k I would bust my ass for the rest of the year to make myself a real estate professional. It’s an arbitrary title where you just need to show that you have put a lot (850 hrs) into real estate. My contacts said it’s never challenged, it sounds like other people have seen it challenged. But just work the 850 and you don’t need to worry about it. You don’t need to put $2mm down. Put the minimum down needed to depreciate the full tax bill in the first year, probably something like $650k.

Think of it this way. You pay the $800k it’s gone forever. Instead you buy an appreciating asset with the money you were going to pay in taxes. Yes it requires work and who knows where real estate is going but it’s certainly not going to zero which is where your $800k is going when you pay taxes.

I thought I read you didn’t have a job and were just day trading. This is a fairly simple solution to save $800k while at the same time diversifying your investments.
I think your repeated advice to the OP to buy an investment property in order to offset the current-year tax on his trading gains is impractical, uninformed, and certainly not simple.

First, the amount of tax the OP is trying to defer or offset is not $800K. He has realized gains of $800K, so the tax is closer to $300K, not $800K.

To qualify as a real estate professional, he would have to perform at least 750 hours during 2020 in the operation of a real estate activity in which he materially participates. Assuming he could buy a property and place it in service by July 1, he would then need to spend at least 6 hours a day, 5 days/week for the rest of the year on the real estate activity to qualify, and be able to document the hours. This, for a guy who knows nothing about real estate, has expressed no interest in owning/operating real estate, and has spent the last 8 years as a day-trader? I think his chances of qualifying as a RE professional for 2020 are slim and none.

In the unlikely chance he qualifies as a RE professional for 2020, how much will he benefit? For residential real estate, the land is not depreciated, and the building is depreciated on a straight-line basis over 27.5 years. There is no "accelerated depreciation" allowed. Something called "bonus depreciation" is allowed for certain types of property with a depreciation life of less than 20 years, such as machinery, equipment, landscaping, etc., and bonus depreciation eligible property can get a 100% depreciation deduction in the first year. The taxpayer could have a cost segregation analysis done to determine how much of the total purchase, or building components might qualify for bonus depreciation, but it's not likely to be a significant amount. The likely result is that his total rental loss for 2020 is relatively small - only a small fraction of the $800K capital gains from trading.

Without a job, the OP cannot get a loan to buy the property. So the OP should think long and hard before using his entire $1.2M liquid net worth to buy an investment property thinking that the investment property loss in 2020 will fully or significantly defer the the tax on his $800K trading gains realized in 2020.
Your response is very enlightening and I want to thank you for educating me. What would you do if you were in my situation? Should I even bother trying to reduce the tax liability?

Lucky2Invest
Posts: 42
Joined: Wed Mar 23, 2016 6:07 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by Lucky2Invest » Thu May 07, 2020 7:19 pm

Repeated advice? I’m answering questions he is asking and have repeatedly said to ask a lawyer. I have no dog in the fight.

I have said it’s going to be difficult but again, for $800k its certainly worth looking into. The title says $800k tax so I assume that’s the actual tax and not the number he’s being taxed on.

I do agree that it sounds poster has minimal experience in Real Estate so unless you have someone you trust that can walk you through this process over the rest of the year it’s probably not worth it. Just pay the tax and spend that 750 hours daytrading as you’re obviously very good at that

User avatar
JonnyDVM
Posts: 2174
Joined: Wed Feb 12, 2014 6:51 pm
Location: Atlanta, GA

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by JonnyDVM » Thu May 07, 2020 7:27 pm

Step 1: OP snags huge 1.2 million dollar score day trading.

Step 2: OP comes to Bogleheads trying to figure out ways to decrease tax burden.

Step 3: Buying an investment property and working enough hours to qualify as a real estate professional for tax purposes somehow is established as the best suggestion.

Step 4: OP works hard, gets real estate license. Finds out he likes the real estate game. Buys a few investment properties. Tries to flip and sell. Shows houses on the side.

Step 5. Turns out OP is actually terrible at real estate. Loses everything.

Step 6. Back to day trading.
I’d trade it all for a little more | -C Montgomery Burns

MarkNYC
Posts: 1762
Joined: Mon May 05, 2008 7:58 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by MarkNYC » Thu May 07, 2020 7:42 pm

Lucky2Invest wrote:
Thu May 07, 2020 7:19 pm
I have said it’s going to be difficult but again, for $800k its certainly worth looking into. The title says $800k tax so I assume that’s the actual tax and not the number he’s being taxed on.
In the OP's second post on 4/30, he states "I have already realized $800K in gains."

On 5/6 at 1:04 PM you stated: "You can use this to offset your investment gains of $800K."

MarkNYC
Posts: 1762
Joined: Mon May 05, 2008 7:58 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by MarkNYC » Thu May 07, 2020 7:57 pm

mask107 wrote:
Thu May 07, 2020 7:10 pm
MarkNYC wrote:
Thu May 07, 2020 6:59 pm
Lucky2Invest wrote:
Thu May 07, 2020 8:59 am
mask107 wrote:
Wed May 06, 2020 3:30 pm

I am not a real estate professional though and I do not have 2 million of capital to invest in RE. I only have 1.2 mill. And don't you see RE crashing soon due to recession? Seems like I would lose more money than I would save?
I realize that but for $800k I would bust my ass for the rest of the year to make myself a real estate professional. It’s an arbitrary title where you just need to show that you have put a lot (850 hrs) into real estate. My contacts said it’s never challenged, it sounds like other people have seen it challenged. But just work the 850 and you don’t need to worry about it. You don’t need to put $2mm down. Put the minimum down needed to depreciate the full tax bill in the first year, probably something like $650k.

Think of it this way. You pay the $800k it’s gone forever. Instead you buy an appreciating asset with the money you were going to pay in taxes. Yes it requires work and who knows where real estate is going but it’s certainly not going to zero which is where your $800k is going when you pay taxes.

I thought I read you didn’t have a job and were just day trading. This is a fairly simple solution to save $800k while at the same time diversifying your investments.
I think your repeated advice to the OP to buy an investment property in order to offset the current-year tax on his trading gains is impractical, uninformed, and certainly not simple.

First, the amount of tax the OP is trying to defer or offset is not $800K. He has realized gains of $800K, so the tax is closer to $300K, not $800K.

To qualify as a real estate professional, he would have to perform at least 750 hours during 2020 in the operation of a real estate activity in which he materially participates. Assuming he could buy a property and place it in service by July 1, he would then need to spend at least 6 hours a day, 5 days/week for the rest of the year on the real estate activity to qualify, and be able to document the hours. This, for a guy who knows nothing about real estate, has expressed no interest in owning/operating real estate, and has spent the last 8 years as a day-trader? I think his chances of qualifying as a RE professional for 2020 are slim and none.

In the unlikely chance he qualifies as a RE professional for 2020, how much will he benefit? For residential real estate, the land is not depreciated, and the building is depreciated on a straight-line basis over 27.5 years. There is no "accelerated depreciation" allowed. Something called "bonus depreciation" is allowed for certain types of property with a depreciation life of less than 20 years, such as machinery, equipment, landscaping, etc., and bonus depreciation eligible property can get a 100% depreciation deduction in the first year. The taxpayer could have a cost segregation analysis done to determine how much of the total purchase, or building components might qualify for bonus depreciation, but it's not likely to be a significant amount. The likely result is that his total rental loss for 2020 is relatively small - only a small fraction of the $800K capital gains from trading.

Without a job, the OP cannot get a loan to buy the property. So the OP should think long and hard before using his entire $1.2M liquid net worth to buy an investment property thinking that the investment property loss in 2020 will fully or significantly defer the the tax on his $800K trading gains realized in 2020.
Your response is very enlightening and I want to thank you for educating me. What would you do if you were in my situation? Should I even bother trying to reduce the tax liability?
Based on all of your comments, if I was in your shoes I would do as some others have suggested, which is pay the tax even though it is painful and get on with your life, and spend your time doing what you enjoy.

Topic Author
mask107
Posts: 67
Joined: Thu Apr 13, 2017 5:54 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by mask107 » Fri May 08, 2020 12:29 am

JonnyDVM wrote:
Thu May 07, 2020 7:27 pm
Step 1: OP snags huge 1.2 million dollar score day trading.

Step 2: OP comes to Bogleheads trying to figure out ways to decrease tax burden.

Step 3: Buying an investment property and working enough hours to qualify as a real estate professional for tax purposes somehow is established as the best suggestion.

Step 4: OP works hard, gets real estate license. Finds out he likes the real estate game. Buys a few investment properties. Tries to flip and sell. Shows houses on the side.

Step 5. Turns out OP is actually terrible at real estate. Loses everything.

Step 6. Back to day trading.
This actually sounds like a good idea! How do you lose everything though? Doesn't real estate always appreciate in the long term? It's a solid investment right

novemberrain
Posts: 322
Joined: Wed May 09, 2018 12:26 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by novemberrain » Fri May 08, 2020 12:50 am

ARoseByAnyOtherName wrote:
Sat May 02, 2020 6:31 am
This is total garbage. Someone is trying to take advantage of you by pitching you all these crazy schemes. If you throw your money at any of these you will end up very, very sad. Do not do this.
This is indeed shady. But these types of schemes are used by the upper middle class (>$1M annual income) more and more nowadays I hear. The IRS does not look kindly upon these. But whether or not your end up paying for it (either as settlement or worst case jail) depends on how good a lawyers you can find.

Mr Trump himself has used conservation easements for his NJ golf course.

LFKB
Posts: 706
Joined: Mon Dec 24, 2012 7:06 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by LFKB » Fri May 08, 2020 1:24 am

You should have done your tax planning before selling and not after.

One way to potentially do it would have been to hedge your position so you could essentially lock in your gain but realize half your gain this year and half of it next.

That would have resulted in a much lower tax burden given you wouldn’t have entered the top federal or CA tax brackets for either year (assuming no other income).

LFKB
Posts: 706
Joined: Mon Dec 24, 2012 7:06 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by LFKB » Fri May 08, 2020 1:52 am

The problem with many of these options to invest in a real estate or opportunity zone is that the tax break is theoretically priced into the asset, so you may be saving on taxes at the expense of lower future returns.

I suppose there are ways to make it work if you hold for short enough, but I haven’t looked into it enough to know.

inbox788
Posts: 7127
Joined: Thu Mar 15, 2012 5:24 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by inbox788 » Fri May 08, 2020 9:54 am

mask107 wrote:
Thu May 07, 2020 6:54 pm
Can I work on my real estate license now and count that towards the 750 hours while I am looking at a house to purchase? So once the house is closed I have like 300 hours under my belt?
I don't see why not, but you should run it by an your accountant/CPA, or lawyer.

One question to ask is how they count the hours and whether you can count them like lawyer billing hours. You can get up to 10 hours doing open houses a day, so that's 100 Saturdays and Sundays, or up to 1000 hours. If you are responsible for the open houses and hire someone to help you 10% or 50% or 90%, while you supervise from the home office (or elsewhere), are they going to ask you to document every percentage point? Or could you get full credit for the whole project? If you take a 200 hour real estate course and miss a day or two because you're sick or skip some classes, are they going to track you and dock you? And if it's an online or offsite course, and you complete some of your hours while you're got some downtime in the home office or while showing homes, will that reduce your credit hours even though you're doing the same thing? Some requirements are sticklers about the what, when and how, while others only care about the end results, so understand who's going to be doing the auditing (i.e. feds/IRS). I would hope 500 paid hours by a broker and a 250 hours realtor license course certificate would suffice, but it's still a big effort and ongoing time commitment. When you figure out the hourly benefit of the tax savings, be sure to remember it's mostly a tax deferral, not an elimination, which might make the difference between $50/hour vs $500/hour.

https://redfin.theceshop.com/pre-licensing
Associate Agents
Show homes, host open houses, and more as an independent contractor.
https://www.redfin.com/careers/real-estate
Real Estate Couriers
Make deliveries and conduct field events to ensure our clients’ homes look their best while on the market.
https://www.redfin.com/careers/real-estate/support

Topic Author
mask107
Posts: 67
Joined: Thu Apr 13, 2017 5:54 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by mask107 » Fri May 08, 2020 10:21 am

inbox788 wrote:
Fri May 08, 2020 9:54 am
mask107 wrote:
Thu May 07, 2020 6:54 pm
Can I work on my real estate license now and count that towards the 750 hours while I am looking at a house to purchase? So once the house is closed I have like 300 hours under my belt?
I don't see why not, but you should run it by an your accountant/CPA, or lawyer.

One question to ask is how they count the hours and whether you can count them like lawyer billing hours. You can get up to 10 hours doing open houses a day, so that's 100 Saturdays and Sundays, or up to 1000 hours. If you are responsible for the open houses and hire someone to help you 10% or 50% or 90%, while you supervise from the home office (or elsewhere), are they going to ask you to document every percentage point? Or could you get full credit for the whole project? If you take a 200 hour real estate course and miss a day or two because you're sick or skip some classes, are they going to track you and dock you? And if it's an online or offsite course, and you complete some of your hours while you're got some downtime in the home office or while showing homes, will that reduce your credit hours even though you're doing the same thing? Some requirements are sticklers about the what, when and how, while others only care about the end results, so understand who's going to be doing the auditing (i.e. feds/IRS). I would hope 500 paid hours by a broker and a 250 hours realtor license course certificate would suffice, but it's still a big effort and ongoing time commitment. When you figure out the hourly benefit of the tax savings, be sure to remember it's mostly a tax deferral, not an elimination, which might make the difference between $50/hour vs $500/hour.

https://redfin.theceshop.com/pre-licensing
Associate Agents
Show homes, host open houses, and more as an independent contractor.
https://www.redfin.com/careers/real-estate
Real Estate Couriers
Make deliveries and conduct field events to ensure our clients’ homes look their best while on the market.
https://www.redfin.com/careers/real-estate/support
I understand it is a deferral, but I have never been in this big of a tax bracket before and since I am in the highest tiered rate, I stand to benefit from a deferral

Topic Author
mask107
Posts: 67
Joined: Thu Apr 13, 2017 5:54 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by mask107 » Sat May 09, 2020 1:52 am

inbox788 wrote:
Fri May 08, 2020 9:54 am
mask107 wrote:
Thu May 07, 2020 6:54 pm
Can I work on my real estate license now and count that towards the 750 hours while I am looking at a house to purchase? So once the house is closed I have like 300 hours under my belt?
I don't see why not, but you should run it by an your accountant/CPA, or lawyer.

One question to ask is how they count the hours and whether you can count them like lawyer billing hours. You can get up to 10 hours doing open houses a day, so that's 100 Saturdays and Sundays, or up to 1000 hours. If you are responsible for the open houses and hire someone to help you 10% or 50% or 90%, while you supervise from the home office (or elsewhere), are they going to ask you to document every percentage point? Or could you get full credit for the whole project? If you take a 200 hour real estate course and miss a day or two because you're sick or skip some classes, are they going to track you and dock you? And if it's an online or offsite course, and you complete some of your hours while you're got some downtime in the home office or while showing homes, will that reduce your credit hours even though you're doing the same thing? Some requirements are sticklers about the what, when and how, while others only care about the end results, so understand who's going to be doing the auditing (i.e. feds/IRS). I would hope 500 paid hours by a broker and a 250 hours realtor license course certificate would suffice, but it's still a big effort and ongoing time commitment. When you figure out the hourly benefit of the tax savings, be sure to remember it's mostly a tax deferral, not an elimination, which might make the difference between $50/hour vs $500/hour.

https://redfin.theceshop.com/pre-licensing
Associate Agents
Show homes, host open houses, and more as an independent contractor.
https://www.redfin.com/careers/real-estate
Real Estate Couriers
Make deliveries and conduct field events to ensure our clients’ homes look their best while on the market.
https://www.redfin.com/careers/real-estate/support
I talked to several CPAs and they said study time does not count unfortunately

mnnice
Posts: 476
Joined: Sat Aug 11, 2012 5:48 pm

Re: Trying to lower $800k tax on short term capital gains. Do conservation easements work?

Post by mnnice » Tue May 12, 2020 7:27 am

simas wrote:
Sat May 02, 2020 9:33 pm
mask107 wrote:
Sat May 02, 2020 9:14 pm
simas wrote:
Sat May 02, 2020 9:03 pm
mask107 wrote:
Sat May 02, 2020 8:23 pm
glensos wrote:
Sat May 02, 2020 4:59 pm
I had a similar large gain 15 years ago. I purchased several Gas and Oil Partnerships and other similar investments, I saved a ton of taxes but lost most of my money as ALL the investments I bought,not even one of them got me my original investment back.

What they sell are the worst investments, but they easy to sell because the tax benefits. The question you should ask yourself is: What investment will guarantee me getting at least the same money I can get with paying the tax.

You know the “bird in the hand is worth two in the bush” saying.

After you are blessed with such a big return, please don’t loose it being foolish.

Glen
So basically, it will be hard to find a legal way that will save me more than 1:1
not possible without fraud, very high risk, or both. especially since you already realized the gain.
free cheese only exists in mousetrap.. hint - guess is you the mouse.

as I said earlier, get real CPA , deal with estimated taxes (if any) , pay it, and move on.
What would a cpa be able to help me with? I have a straightforward tax return as I am unemployed. Only thing they would recommend me to do is set up an entity but an entity does not help with gains already made and I cannot deduct retroactively? Or can I?
have you heard about such things as underpaying penalty? if not, and you realized significant gain , the timing of such event matters, and you may have to pay additional penalty if you did not properly, timely paid estimated taxes resulting in under withholding of tax liability. That could be 5% of additional tax that is just a price of negligence on behalf of taxpayer. get a CPA to at least review that..

or more specifically, are estimated taxes part of this conversation or not (depending on the timing of the event). if you have to deal with estimated taxes, deal with estimated taxes properly and get basic advice of someone trained in giving it.

I am not a CPA
You might also meet the IRS definition of a trader which would give you business expenses to deduct from taxes.

Post Reply