If you had a bad year in your real estate business this blog entry may put a smile on your face and money in your wallet.
As we all know, even though we may try as hard as we can, many real estate agents are not successful in selling properties. When this happens there is very often a tendency to not keep track of all of their expenses associated with their real estate activities.
If this is your situation let me advise you it is more important than ever to keep track of all of your expenses because it could mean some really big tax refunds for you.
When you have a loss in your business you may have incurred what is known as a net operating loss.
If a 2011 loss exceeds income, the excess may be first carried back to 2010 and 2009 and then carried forward for 20 years until it is used up. This means your loss could be used to either get you refunds on tax paid in the past two years or used to reduce taxes paid in the next 20 years.
If it is advantageous to your particular tax situation you may want to relinquish the carry back and make an election to carry your loss forward to future years.
You will generally make the election to relinquish the carry back if you expect greater tax savings by carrying the loss forward. That is you expect to make more money in the future and be in a higher income tax bracket.
You might also make the election if you are concerned you might be audited for earlier years if you carry back a loss for a refund.
You make the election by attaching a statement to this effect to your return for the year of the loss, which is filed by the due date plus extensions. The IRS refuses to allow a late election and received court approval for its position.
Over my thirty-three years of preparing tax returns I have used this technique to save my clients hundreds of thousands of dollars in income taxes. I cannot tell you want a relief it has been for clients who owe $50,000 to have me pull an old NOL out that has been carried forward and show them they actually owe nothing.
About admin
Check out My Space page for a more information on me. In your search type "Gary Sweat".
I was born and spent the first 28 years of my life in Richmond, California. I have also lived in San Diego and North Idaho. I moved to Washington State in 1991.
I have 30 years of experience as an Accountant.
• After graduation from college I worked for a financial services firm in Oakland, California. The firm was comprised of CPAs and attorneys. I was in charge of all financial needs for 25 businesses. Duties were preparation of financial statements, income tax and sales tax returns, obtaining business licenses and giving tax and operational advice to the businesses. I also prepared payroll and payroll reports for my clients. The job entailed extensive use of RIA and CCH references for tax research. Clients ranged from medical groups, delicatessen chains, transmission repair chains and many others. I was employed with this company for 3 ½ years.
• In 1983 I opened my own CPA firm in Vacaville, California. My clients required me to prepare financial statements for their companies, as well as every type of tax return (1040, 1065, 1041, 1120 and 1120S) along with state returns. Clients also needed payroll, payroll reports and sales tax returns. My duties required tax research and advice on a wide variety of topics. As a result of close proximity to Travis Air Force Base I prepared tax returns for many states due to the relocations, both civilian and military. In addition to my initial office, I opened two more offices in Fairfield and Walnut Creek, California with a total of nine employees at these offices.
• In 1992 I had an opportunity to purchase a CPA practice in Friday Harbor, Washington. Friday Harbor is located in the San Juan Islands of Washington State. Duties remained consistent with the types of work I had been performing in Vacaville, but with many more clients.
• In 2001 I relocated my firm to offices in Bothell and Bellevue, Washington.
• Over the years the majority of my clients have come to be real estate agents and their clients. Therefore, for quite some time I have specialized in preparing tax returns for real estate agents.
• I received so many requests for tax advice from real estate agents that I authored a book - “Tax & Financial Tips for Real Estate Agents.” I used ecommerce solutions to promote the book and it has sold in all 50 states. I am continually called on to provide advice concerning a wide variety of tax questions, preparation and advice, both locally and in other states.
• I am also a retired Real Estate Agent.
Check out my website: http://agentstaxtips.com
