DreamboatAnnie's Account Talk

[Mcqlives]

You are very welcome evilanne! I am down to a couple of years till I join you in pension land. Hope to be up another 25% by then.

And Nasa....I agree with you wholeheartedly on the I fund. I just keep ignoring the itch to do a transfer to it cause the C and S are plodding right along. But I have been buying into it every paycheck for the past year so I do have a few % in there now.

 

[DreamboatAnnie]

False alarm in Hawaii?? Just heard there was a text issued stating a ballistic missile going to Hawaii and that it was not a test. Got that news from a friend, thought of Konakathy, and then learned 30 minutes later that it was false alert. Ugghhhh... Was this a mistake or was it done on purpose to know how the island would actually react??

 

[kb9nvh]

So the hawaii false alarm ..that is crazy....but Honestly, if the first indication of an incoming nuclear missile isn't a pile of THAAD interceptor missiles leaving the island to meet the threat then you have to know the message has to be in error..or the greatest practical joke ever!!

False alarm in Hawaii?? Just heard there was a text issued stating a ballistic missile going to Hawaii and that it was not a test. Got that news from a friend, thought of Konakathy, and then learned 30 minutes later that it was false alert. Ugghhhh... Was this a mistake or was it done on purpose to know how the island would actually react??

 

[DreamboatAnnie]

So sad that it took so long (35 or so mins) for them to notify everyone about the false alarm. Hawaii's State emergency management reportedly made error during a shift change.
What is sobering is to realize that the US mainland including East coast doesn't have much more time... 40 minutes at most! Well enough of this....

 

[konakathy]

AlooooHA, DBA! Yes, we had quite a confusing, surreal and scary morning here. I was awoken by the screaching emergency alert blowing up my phone and a few minutes later phone calls from friends around the Island wondering WTH was going on?!
I turned on the tv to find emergency tapers running across the channels telling us this is not a drill, a missile is headed to Hawaii within minutes and to return home or take shelter. SHELTER?!! Where? A lava tube? We have no shelters or bunkers, or any place to go! Crazy.
The people on Oahu were panicked. Local news showed people running out of hotels, off the beach....people in some neighborhoods lifted off manhole covers and were handing down their children to the sewers for protection. There is no place to go.
And you’re right, DBA, CIvil Service took too f’ing long to notify us of the false alarm. No one knew what to do.
@ k9 - that was one of my first thoughts also. Why can’t the military shoot it down?!
Lessons learned from today....enjoy each day, live life to the fullest and wear clean underwear.

Mahalo for your concern.

 

[nasa1974]

Scary enough for the locals. Can you imagine what it was like for the tourists?

 

[DirectKarma]

Scary enough for the locals. Can you imagine what it was like for the tourists?

Haahaa! I’m here on Oahu. I’m up at Schofield. I know of old Ammo holding area on a range. I’ve always remembered since I first saw it 2 years ago. I loaded my family up. Grabbed snacks and water and headed there. As soon as we arrived, the word got out about the false alarm. We have been stacking cases of water in the garage for about 6 months. Just one every once in a while. We got about 10 cases. Now my wife knows where to go. We made bug-out bags with MREs, first aid stuff and flashlights. We were the only ones there.
I asked my leadership back in May what the plan was if Kim decided to launch on us. They looked at me like I was stupid. I planned, they didn’t. When I texted my immediate supervisor today to find out the validity, he said “IDK, just find shelter or stay home!” I had most the provisions need for about 4 days with my family in a 30x100 ft bunker under about 10 ft of dirt and reinforced with 8 inch concrete walls. No electricity but the necessary items we brought with us would have been good enough.
Dido to the live life everyday, and cherish the moments you have. 2 deployments to AFG as 11B and this was my scariest moment, with my wife and 3 children.
Stay safe!


Sent from my iPhone using TSP Talk Forums

 

[Whipsaw]

Luck favors the prepared.

 

[DreamboatAnnie]

I feel a little sick, but im going to suck it up and jump in. 100% S fund. I guess i will try to stay in long term.....haha...a few weeks?? We have many earnings reports coming and while it might drop next week, I still have feeling the market may see a Govt shutdown for what it is...politucal maneuvering. I think it shakes it off. Geronimo! But i am worried about it. :worried:

I am now fully convinced that I dont have a freakin clue!

Best wishes everyone!!!!!!! :smile:

 

[nasa1974]

I feel a little sick, but im going to suck it up and jump in. 100% S fund. I guess i will try to stay in long term.....haha...a few weeks?? We have many earnings reports coming and while it might drop next week, I still have feeling the market may see a Govt shutdown for what it is...politucal maneuvering. I think it shakes it off. Geronimo! But i am worried about it. :worried:

I am now fully convinced that I dont have a freakin clue!

Best wishes everyone!!!!!!! :smile:

Looks like you picked a good day to jump in.

Of course this morning was looking really good.

 

[kb9nvh]

Looks like you picked a good day to jump in.

Of course this morning was looking really good.

Good day to get back in....hard to hit a moving target. We knew we would get a pullback...and you found it!! To me it seems like good news, more of this letting off steam hopfully keeps the big drop from happening for a while.

Sent from my SAMSUNG-SM-N910A using Tapatalk

 

[DreamboatAnnie]

Yep...when I got in market Tuesday, it was high so I Felt awful getting in at high price. Then in afternoon it drops, so then I worry dang it, its gonna keep dropping. Lol.... So I guess it was just luck ??? But the next few days will tell...

Relieved it went up today. Just hoping it gives more. Still thinking to stay in rest of month. I expect fear will pick up with Government shut down looming, but believe any drop will be short lived.

Best wishes to you all !!!!!!!!!! :smile:

P.S. Futures are down on DOW right now by 27 points....earlier they were up 18.
Ohhhh....
NOKO is what really could mess things up. I heard Japan had a false alarm like Hawaii Tuesday... Not much said on it .... Hummm....makes me wonder if that was coincidence.... I guess will need to see if I can find more on that ..... Heard it on Fox.

 

[DreamboatAnnie]

Hi DBA!

Just a quick drive by to you and others considering normal indicators and seasonality. This year will be the one to watch for sure. Corporations will be maximizing writeoff's from last year for this filing season while setting up for maximum profits in seasons to come. With that in mind keep an eye on March 15th. I expect many haven't considered the implications of this but Buffet touched on it the other day during an interview.

Think about it this way. You invested in a corporate structure with 4 other friends so each of you share 20% of everything (or think mutual funds if you want). The old rate of 35% is done as of this filing season so you want to write off as much as you can so you are only taxed on the minimum you have to be. This means that you were getting tons of paid contracts for upgrades done the last week of 2017 (I know one farm services corporation that dropped over 100mil doing this between December 26 and Dec 29). This reduces the net taxable while increasing infrastructure/capacity/production/etc. You then take advantage of this increased capacity this year and, hopefully, for years to come at the lower rate of 21%. Now here is the beauty of it....your realized valuation went from an effective 20% to something arguably in the 34% range. The reason for this is that 14% drop in the rate increased valuation a corresponding amount at the stroke of a pen. Much of that has been priced into the markets already (IMO) but what hasn't been priced in is the effective increase in productivity/profitability/etc that the investments will give. When those figures are finally realized I think the markets will be much higher than they are now and we will actually be able to figure a new market trend out. I think we will see stock splits and dividends like we haven't seen since the 80's. We just have to wait for the earnings and filings to get reported to see if I am right.

Hi Mcqlives, Sorry for late response. Yes, the March 15 date is when pass thru companies like limited liability partnerships and the small S Corporations must submit their 2017 tax returns. So loading up expenses in that 2017 return makes sense to reduce their tax burden in the year with higher tax rates.

You mentioned that "your realized valuation went from an effective 20% to something arguably in the 34% range. The reason for this is that 14% drop in the rate increased valuation a corresponding amount at the stroke of a pen." That is definitely true. When the tax rate was dropped for Calendar year 2018 down to 21% for corporations, it did drop the rate tremendously. That tax cut immediately resulted in the corporations keeping that 14-15% and not being required to pay it to Uncle Sam. Thus, instead of those being tax expenses on their books for 2018, it is now cash/liquid assets that is on their books, causing their net worth to increase by that same amount (I..e valuation of that business) with each passing day. That is why we are seeing employers giving employees bonuses or hourly wage increases.

Whether or not the amounts employers passed on to employees was/is equitable or whether the tax cuts increase to the National debt (due to Uncle not collecting the taxes that are always passed on to citizens who buy their wares) was a good thing is a different/political question that should not be addressed here.

But the bottom line is that those businesses have immediate reduced tax liability and they can now spend it as they see fit. Those who were quick and had working capital to expand their capacity (invest in their company's infrastructure) by spending money and creating the expenses in 2017 were able to capitalize on this. Good for them...Love it!

 

[DreamboatAnnie]

Please note that I have not read the entire law that was passed but aside from Corporate rates going to 21% there was also a provision that I must look into regarding pass through organizations as well as some provisions that affect rental property owners (possibly including sole proprietors).

My limited understanding at this time, is that rental property owners (landlords) are getting a 20% exemption on their rental property income and somehow it will also be claimable by sole proprietors for certain service businesses. Not sure about that service business part. I heard something about real estate brokers and accountants being excluded from the service businesses except when they make less than a certain dollar amount (maybe around $150k?? )

I don't believe IRS has been able to put out guidance yet, but I will be looking into it. I have some rental property in SA and so I am hoping I do not need to spend money to create a LLP (pass thru corporation) to take advantage of this.

Best Wishes to you all!!!!!!!!! Hope you are having a Great Weekend!!!! :smile:

 

[kb9nvh]

I wonder about a sale of a rental property and if taxes you pay on the sale (and depreciated amount) are charged as capitol gains or as real income?

 

[evilanne]

kb9nvh,

I'm pretty sure that it is a combination of capital gains and ordinary income--it can be complicated.
--The actual gain is either ST or LT capital gain depending on the holding period
--depreciation recapture is taxed as income.
Note: I'm referring to residential rentals; not sure whether non-residential property rules are same or different.
Here is a recent article that provides a good summary and links to various IRS publications: https://www.thebalance.com/depreciation-recapture-3192979 You can probably figure it out yourself by familiarizing your self with the different publications, use one of the higher priced tax programs or consult with a tax professional prepare your taxes when you actually sell the property.

 

[DreamboatAnnie]

I wonder about a sale of a rental property and if taxes you pay on the sale (and depreciated amount) are charged as capitol gains or as real income?

Hi, It will be a mix of capital gains and ordinary income just like EA said. The portion that was depreciable over the years you rented it out will need to be "recaptured" at ordinary income tax rates. There is no way that I know of to avoid this on sale of rental property unless you (1) do a like kind exchange, (2) move back into it for a number of years to try to get treatment on sale of personal primary residence, or (3) don't sell it and instead let a loved one inherit the property, in which case they get a stepped up tax basis when they inherit it....so the tax basis in the property is reset to the valuation at time of your death, or 6 months after. So they can then sell and end up paying very little in capital gains. oh yes... even if you try to avoid the section 1250 recapture by not claiming depreciation over the life of the rental, you still end up paying on it because the IRS rules have you compute the "allowable" depreciation in computing gain on sale of rental property.

As for option 2, I am still looking at that as I believe rules have changed and I have not looked at the rules in a long time. at one time you only needed to live in it for 2 years but thought I recently heard about a longer 5 year period. Regarding option 1, I had heard like kind exchanges could go away with new tax law but never heard if it actually happened.

Best wishes!!!!!! :smile:

 

[kb9nvh]

I do plan to move back into it so will I owe all the depreciated tax on it the day its not a rental anymore?

Hi, It will be a mix of capital gains and ordinary income just like EA said. The portion that was depreciable over the years you rented it out will need to be "recaptured" at ordinary income tax rates. There is no way that I know of to avoid this on sale of rental property unless you (1) do a like kind exchange, (2) move back into it for a number of years to try to get treatment on sale of personal primary residence, or (3) don't sell it and instead let a loved one inherit the property, in which case they get a stepped up tax basis when they inherit it....so the tax basis in the property is reset to the valuation at time of your death, or 6 months after. So they can then sell and end up paying very little in capital gains. oh yes... even if you try to avoid the section 1250 recapture by not claiming depreciation over the life of the rental, you still end up paying on it because the IRS rules have you compute the "allowable" depreciation in computing gain on sale of rental property.

As for option 2, I am still looking at that as I believe rules have changed and I have not looked at the rules in a long time. at one time you only needed to live in it for 2 years but thought I recently heard about a longer 5 year period. Regarding option 1, I had heard like kind exchanges could go away with new tax law but never heard if it actually happened.

Best wishes!!!!!! :smile:

 

[DreamboatAnnie]

The tax to pay capital gains and pay taxes on recaptured section 1250 depreciation does not happen until you sell the property. If you convert the rental property to your primary residence and live in it for the required period and then sell it, the answer is no...at least based on current tax law.

Best wishes!!!!!! :smile:

 

[kb9nvh]

I would like to double like your post!!! Because that saves me a boatload of money that can be used in the huge remodel I plan to do to it first!!!

The tax to pay capital gains and pay taxes on recaptured section 1250 depreciation does not happen until you sell the property. If you convert the rental property to your primary residence and live in it for the required period and then sell it, the answer is no...at least based on current tax law.

Best wishes!!!!!! :smile: