Read Stories of Real Client Advice That Paid Off Big-Time

Stories Ranging Throughout 40+ Years of Experience


Out-of-the-Box Solutions

Working smarter, not longer and harder, is THE KEY. This means finding a better, more efficient way to accomplish your financial goals. This better, more efficient way is usually found by “thinking outside of the ‘usual’ box,” tailor-made to your own individual situation.

When My Real Estate Investor Client Saved Big on His Real Estate Investment

My client owned a house he wanted sell at a considerable profit. He bought the home for $50,000 (back in the 70’s) and wanted to sell it for $600,000. There was no debt on the house. Capital gains taxes in California equal 33.3% (Federal rate=20%/State rate=13.3%) – $183,150.

How did we legally avoid that tax? We moved his aging parents into the house, making them the “official owners” for the 2 years required to qualify for the personal residence capital gains exclusion. (The house had formerly been a rental and we converted it to a personal residence.)

My client had put about $50,000 or so into improvements for the house, but we had no documentation for the improvements. So I had my client go about the house and take pictures of the improvements. To those pictures, we added a certified affidavit testifying he had added these improvements and what approximate year he had done that, along with a reasonable cost for the improvements. (Under the tax court case of Cohan verses Commissioner of IRS we are legally allowed to do this, except for travel and entertainment costs). When my client sold the house, it was tax free, using the personal residence exclusion.

My strategy saved him $183,150 in capital gains taxes.

How My Real Estate Agent Client Was Able to Legally Avoid a Large Self-Employment Tax Hit

My client, a real estate agent, had made $110,000 in commissions from selling real estate for his clients. He also had large losses from his real estate investments, which zeroed out his taxable income.

“No problem,” he said to himself, “I won’t have to pay income taxes this year.” Au contraire, my good client. It is true you don’t owe income taxes, but have you forgotten the self-employment tax on your real estate commissions?

He owed $15,568 in self-employment taxes, and the real estate losses did nothing to offset the self-employment tax. How did we legally avoid that tax?

Because he was a real estate agent, I simply changed his status from “Real Estate Investor” to “Active Business Real Estate Operator,” which now put his losses in the category of a regular business.

Having done that, his losses from his real estate “investments” now could be used to offset his self-employment tax.

By thinking outside the box, I saved my client $15,568 that he didn’t have.

My Client Saves $2.5 Million in Estate Taxes

My client owned a house, debt-free, worth $9 million in San Diego. He announced to me he was dying of cancer.

His estate was facing a $2.5 million estate tax liability with not nearly enough cash to pay this tax. How did we legally avoid that tax?

I had his daughter, who was living out of state, form an LLC, with my client’s grandchildren as members of the LLC. He gave this LLC $300,000. That LLC in turn “loaned” this $300,000 back to my client, collateralized by his $9 million house.

And wouldn’t you know it? My client didn’t pay his $300,000 mortgage, causing the daughter’s LLC to “foreclose” on this house, sucking it right out of my client’s estate—LEGALLY, of course. He died 3 months later.

Result: No estate tax on the house. I saved my client’s family $2.5 million in estate taxes.

You know that solutions to your tax and financial problems must be according to the law. Any other strategy will not work to bring you the long-term results you seek. You can be sure that Coronado Accounting Experts, LLC will recommend to you only financial strategies that are within the law.

When the Charlatan Claimed We Do Not Have to Pay Income Taxes

My long-time client called me on the phone, confused about filing income tax returns and paying income taxes. He told me he was confronted by this “financial con man” with a briefcase full of papers and “research studies.”

“Do you know that taxes are voluntary?” the con man asked my client. He tried to show my client how he could file a “no activity” tax return under some specious legal theory that United States citizens are not liable to file tax returns AND pay the liability shown on those tax returns. I took away my client’s confusion and also a potential legal problem for him by simply refuting the con man’s so-called “legal arguments for not filing and paying.”

The Law in the United States, based on the 16th Amendment to the Constitution, is that Congress has the right to enact and enforce the income tax laws through its administrative agency, the Internal Revenue Service.

By warning my client that failure to file and pay his lawful taxes would put him at risk to face serious legal problems, I helped him to peacefully continue the pursuit of his life’s goals.

The Divorce Gone Ugly

My client was going through an ugly divorce. His business was cranking along at about $10,000 per month in net profit. A big monthly child support and alimony bill was staring him in the face.

He was angry that he was going to have to pay a lot out of his income. He wanted me to “amend” his business tax return and personal income tax returns to show less income. I was also asked to “adjust” his monthly financial statements to show a “downturn” in income.

What he was asking me to do was commit fraud for him, in the face of the family court. This I would NOT do. It’s illegal and unethical. What we did decide to do was SELL his business, which he was planning to do anyway, and divide the proceeds of that sale with his ex-wife, which would alleviate the alimony issue.

My client would then go to work for the business he sold as a W-2 employee, after which his child support would be computed based on state-issued tables. ALL of this was legal and satisfied both my client and his ex-wife.

The Accumulated Earnings Penalty Tax

I had a very frugal client who had accumulated well over a million dollars in retained earnings in his wholly-owned corporation. Most of that sum was in cash. He also paid himself a very small salary, hoping to pay the lower corporate tax rate rather than his personal tax rate.

In order to stay within the law and also avoid the 20% penalty rate for accumulated earnings, we had to come up with “expansion plans” for the business to justify why my client’s corporation needed to accumulate “working capital.” The issue came up on a subsequent corporate audit from the IRS.

Since we had planned for this contingency before-hand, we were able to easily answer the IRS auditor’s “discovery” and satisfy her that there was no legal reason to impose the accumulated earnings penalty tax.

Informative Articles on Changing Business and Tax Landscapes

Keeping you abreast of what could affect your business taxes and financial decisions is important to us, as yet another avenue to serve you. We make our articles short and to the point, in language that makes sense to you. Our advice is always geared so you can act on that advice to maximize your after-tax income.

I constantly review the changing business and tax landscape. When I come across changes that MAY affect your finances, I will put a “quick” short article in my website that you can look at to keep you updated with a minimum of your time expended. In addition, from time to time planning opportunities appear, with warnings. I will provide a short article to make you aware of those opportunities and what you need to do to avoid the pitfalls. Below are just a few of topics that potentially affect your business.

Annual Information Reports Required for Nearly All Small Businesses

The Treasury Department will require almost ALL of the estimated 32.5 million U.S. small businesses to file an annual information report with their agency, called FinCen—Financial Crimes Enforcement Network.

Known as the BOI Report, or Beneficial Ownership Information Report, this report must be filed each year from 2024 forward. The first report will be due by December 31, 2024.

Stiff penalties will be incurred if a business fails to file this information return.

Real Estate Investors Who Sell More Than 10 Properties

A real estate investor who sells more than 10 properties in his regular course of business (year in and year out), may be assumed to be a “dealer in Real Estate.”

That will henceforth subject his gains to ordinary income rates (not capital gains rates) and to self-employment tax.

Pension Laws are Constantly on the Move

Pension laws are constantly on the move. If you are saving for retirement in a tax-deferred retirement account, you need to be aware of these changes.

Peace of Mind for You and Your Family

When issues arise that affect your business and personal finances, you know we are just a phone call away. We, in concert with you, will work out an effective solution to give you and your family the peace of mind you all deserve.

The IRS Attacked My Client and I Defended Her

Frantic, my new client called me on the telephone. The IRS was threatening to seize her wages and her bank account. It appeared she would be unable to pay her home mortgage.

What had happened? A false Form 1099 had been filed by a former company she had worked for, showing a large amount of income my client knew nothing about and had never received. IRS notices had gone to an old address. The IRS was assessing her for the tax on this false income. Both her current employer and her bank apprised her of this threat to her personal finances.

I immediately took action, contacted the Taxpayer’s Advocate’s Office and we put a hold on any IRS action. The former company she had worked for was out of business and there was no one there to indicate that a false Form 1099 had been issued. I worked with the IRS, showed them the error by giving them the documentation they demanded, and they removed the garnishment on her income and the levy on her bank account. She later told me that knowing that I was “on her team” gave her and her family “peace of mind.”

Things Went “Ugly” in a Real Estate business with a Con Man Partner

My real estate agent client had attempted to enter into a partnership with an individual who appeared to have promise. The objective was that this person would buy out my client’s real estate business after 2 years, after getting his real estate license.

As it turned out, this partner was a “con man” who cost my client hundreds of thousands of dollars in lost business and also in outright expenditures. The “con man” then filed a complaint with the Real Estate Board, threatening my client’s real estate license.

I was asked to testify before the Real Estate Board. I showed them the large amount of expenditures my client had paid out for this partner as well as the business tax return filed for this business, which indicated the large amounts paid on behalf of this con man partner. The threat to her real estate license was resolved.

My real estate agent client ascribed her ability to prevail before the Real Estate Board as well as the elimination of her income tax liability for the years 2021 and 2022, to my expertise. She tells me now that she has considerably less stress because I am working for her as her CPA.

Working Capital Financing Needed in a Landscape Business

Every two weeks, my landscape construction client had to make payroll for the eight (8) staff he had employed. He billed his work to his clients monthly, but he wasn’t being paid on time.

A cash crunch developed, so I prepared both business and personal financial statements that would enable him to qualify for a line of credit at his bank. I showed the large amount of real estate investments he held, which would act as collateral for the line of credit he took out.

He wanted to stop the mad panic he faced every two weeks. Making payroll was such a major stressful event in his life. I relieved that stress by working with the bank to get the documentation they needed to give him this line of credit.

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