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Tax Smart Real Estate Investors Podcast
375. Why S Corporations Are a Disaster for Rental Properties (And How to Get Out)
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If you’ve ever been told to put your rental prope…
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You're now listening to the Tax Smart REI Podcast, the number one tax podcast for real estate investors,
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your source for all things real estate accounting and tax. Here we reveal our secrets that can save you thousands in taxes, streamline your accounting process and help grow your business. Stay tuned to hear insightful interviews with industry experts, successful real estate investors, and current clients on what strategies they use to grow their business and how they steer clear of Uncle Sam.
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Hey everyone, thanks for tuning in to this week's episode of the Tax Smart REI Podcast. Today we'll be talking about the age old problem S Corporations and real estate. It's really easy to get into S corporations when you're in real estate, but it's hard to get out. So we'll talk about why S corporations are an issue when you're dealing with rental real estate. We'll talk about is there any remedies to actually get out in a clean way? And then we might talk a little bit about when it's corporations do make sense in real estate. And this is going to be targeted more towards individual investors and small partnerships. We'll have another episode coming out on the Major League Podcast for syndicators and fund managers. And stick around to the end because there's another frequently asked question that recently came in and we'll be answering that one at the end. All right, so we'll be diving to all of that in just one minute. If you own short term rentals or you're thinking about investing in them, this is worth paying attention to. A lot of investors miss out on tax savings simply because they don't fully understand how the short term rental tax rules work. They that's exactly why we put together our Short Term Rental Tax Strategy bundle. It includes a short term rental tax strategy white paper that explains the rules in a clear, practical way. We also included a material participation guide to help you better understand how to qualify for the tax treatment many investors are aiming for. It's designed specifically for short term rental owners with straightforward guidance on how you can actually use it. If you want to get a better handle on how this strategy works and whether it applies to you, check it out. Go to www.therealcpa.com str tax bundle to get the short term rental tax bundle today, you can also check it out using the link in the show notes this episode. That's all for now. We'll be diving right back into today's episode. All right, and we are back. So you know what kind of kicked off this episode is not only do we get this question all the time. We have real estate investors putting their rental real estate in an S corporation. Perhaps an attorney advised on it, Perhaps it was a mistake. For whatever reason, somehow these rental properties get trapped in an S corporation and. And we're going to be breaking all that down. But the original question that sparked the idea for this episode is the question is, and I quote, got any ideas on how to get a rental property out of an S corporation or convert it tax free to an LLC or an lp? All the advice I heard says it can't be done. So we will be answering that question. Can it be done? Can it be done? We'll find out. Nate, do you want to maybe just kind of kick us off with why people might even get into this issue to begin with?
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Yeah, totally, Tom. Long story short, bad advisors or lack of knowledge. Right. And just going to kind of throw that out there immediately. Like that's typically what I see happen a lot of times. So they come to us and they say, hey, I saw that. Like my last tax person said I should do an S corporation. Or someone else said I should do it, or it makes sense, or I saw it online, it would create tax savings for me. So I went ahead and set this up. And then we have to give them the news that, hey, that's actually not the case. And so, like, the biggest one we see is you saved on self employment, but it actually then creates big tax issues for you, right, Tom?
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Yeah. The biggest use case for an S corporation is to help you avoid or mitigate rather your exposure to the self employment tax. And self employment tax is usually generated when you're an active business. Okay, an active business could be consulting, it could be you're running a small eshop, manufacturing. It could be a medical practice, could be an accounting, it could be any number of these things. When it comes to real estate, most of the time your active businesses will be wholesaling, flipping, developing things of that consulting. Maybe you're, you're a real estate agent or broker. In those situations, it typically makes sense to consider an S corporation because again, you have active income, which is exposed to the self employment tax, which is a 15.3% and then an additional 3.8% over certain thresholds. So that's when it usually makes sense to consider it. However, when you're dealing with rental real estate specifically, it doesn't make sense to put it in S corporation for the most part. There might be some limited exceptions, but it doesn't usually make sense to put in an S Corporation because there's no exposure to the self employment tax on rental properties to begin with. So that it just doesn't make sense. I know some attorneys in the past, from my understanding, would recommend an S corporation because they believe that it has better asset protection elements to it or attributes. Whether or not that's true or not, I'm not sure. I'm not an attorney. But I will tell you there's much more appropriate entity structures using LLCs that can help you avoid this. But anyway, it's. I'm going down a little bit of a rabbit hole here maybe Tom, I
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C
actually want to pull on that, on that rabbit thread as a rabbit hole, rabbit hole thread. I don't know which one it is, but basically, I don't know. Like a S election is a tax only election. Does not change anything from a legal liability. Like you can be an LLC and then be an S corporation on top of that. Right. That's why it gets so confusing when we have these type of conversations. People go, well, I'm an llc, but I'm also an S corp. Or do I become an S corp and then an llc? It's like, no, you can be an llc. So there's state law and then there's tax, right. A lot of times there's tax fiction that doesn't exist for like actual state law reality. And so in this specific case, when you file A form 2553, that's the S corp election, that means you have just made this decision for tax purposes. It doesn't touch anything that happens in your state, your state law. Whatever happens there legally, nothing goes on there. It is only for specifically tax purposes. So I have no idea why attorneys say this, I'm not an attorney, but I feel comfortable saying that it used
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to be back in the day, used to actually have an S corporation, was. There was no llc. It was an S corporation like that.
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C
Sure, that was corp. It was just a corp and it
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had the S election for the corp. But anyway, we all know it doesn't make sense, but let's break down a little bit about why it doesn't make sense. Just to kind of flesh it out for everybody here on what the issues are. Should we break it down one by one?
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Yeah. So Tom, we'll talk real fast. Like you mentioned earlier about the operate like the. Basically there's entities that hold assets and there's entities that are service businesses. Right? You talked about those earlier. Basically I say if you are the asset, right? Your mind, your brain. So Tom, Tom is an asset Right. He's the asset at the firm. And because of that he might want to consider an S corporation because he's the asset, his brain's the asset. Now if Tom was holding real estate, that's the physical asset. That's a differentiation, right? If you are the asset, S corporations might make sense. If you are holding assets as corporations do not make sense. That's like a one liner I like to think through and having these conversations,
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you know, that is a good way to frame it. That is definitely a good way to frame it for sure. Now going into some of the issues on why this is an issue for rental property investors themselves, I'm sure everybody tuning in, okay, they get they shouldn't do it, but why shouldn't you do it beyond just the fact that you're not going to get help with the self employment tax? Because there is none for rental properties. The first one is, unlike when you're investing as an individual or a partnership, the entity level debt does not increase your basis, which does have issues. When you're trying to say, for example, take additional distributions out of the S corporation or perhaps in some cases losses, it doesn't actually impact your basis in the way that it would for partnerships. That actually caps you and hurts you in that case. That's just one of the many things.
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Yeah, Tom, So basically what happened, like people don't understand this a lot of times that it used to just be, hey, you only get basis for whatever you purchase, right? This is very obviously like literally 100 years ago. Like you, hey, what do you purchase? That's what you get basis on. But then at some point in time down the road, someone said, well actually you should get it for debt too, right? What are you borrowed your overall purchase price. Unfortunately for S Corp, it's just money you put into the corporation. So you don't get the quote unquote debt. So if you put in $100,000 and then you borrow $900,000, you, you're only really getting what we call stock basis. I know it gets confusing, but we're calling this basis in the S corporation. So that way you don't include the limited liability. We actually saw a lot of these issues with Eidl loans, right? Eidl loans. Back in the COVID times, people got massive Eidl loans but then go, hey, I'm taking all these distributions out of company or distributed the loan to themselves, which different issue for another day. But that created the distribution issue that you're talking about, Tom, because they didn't get Basis for taking that distribution. Normally in a partnership you would get basis for that. You'd be able to take that distribution, no problem than the S Corp. That actually turns into income for you when you do that.
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Right, right, right. That's one of the reasons. Right. But now perhaps the biggest reason, and I would say this is the one I've ran into the most with clients and prospective clients over the years, is when you need to restructure. Right. So when you have the property in the S Corporation itself, it's usually, you know, there's some limitations, some issues that we just discussed. But the biggest issue is what happens later on. What happens if you need to restructure down the line, Whether it's for asset protection purposes, whether it's to get financing, special types of financing in some cases, or you need to do it for estate planning, so on and so forth. And you need to remove the property from the S Corporation before you're ready to sell to a third party. That is the biggest issue. Because if you sell it to a third party, great, you collected your cash, you're good to go. The problem is when you remove a property from the S Corporation, it becomes a sale. And it becomes a sale at the fair market value of the property, despite the fact that you may not actually sold the property. So here you are, you're creating a potential tax liability, but you never actually collected any cash to pay it. Hey, real quick, if you've been a longtime listener to the show, then you know we give everything away for free from how to use the real estate professional status and the short term rental loophole to save tens of thousands of dollars on taxes to upcoming tax changes. We don't hold anything back. And the only way we're able to help more real estate investors is if you rate, review and share the show. It just takes 15 seconds to leave a quick rating review or share with a friend who may find this information useful on their real estate journey. That's all for now. We'll dive right back into today's episode.
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No, that's great. No, Tom, that's like fantastic. We should break down an example. So specifically to that. So someone purchased a property sometimes just to say you actually saw this. A lot happen in New York time, right? Like where people will go buy New York real estate and they'd make all these S corporations, right. Back then they didn't understand what the effect was going to be. Now we're 60 plus years later, Tom. Right? We're like almost 60 plus laters, right? Someone bought new York real estate in the 70s put in S Corporation. What do you think the value is on that New York real estate now versus when they purchased it? Right.
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Substantially higher. I don't know what it would be, but a lot more.
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It's stupid crazy, right? Stupid crazy. Like, we're looking at like, $50 million worth of real estate versus, like, when they purchased it for maybe a million bucks. So significant appreciation over time. And so now they tried to. Well, we want to refinance on the equity that's been appreciated here. But they can't do that, can they, Tom?
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No, I mean, because in one of the situations I've seen, what happened was, is that the bank would not finance it in the S Corporation because there was other assets and other activities going on within the S Corporation. And the bank said, we need this to be in its own standalone entity, like an llc. And that caused an issue for the client, because now the client had to say, okay, well, I have to remove this from the llc. And this particular client had acquired this property in the 90s, and I forgot the exact purchase price. We'll just use an example here. Let's say that it was $500,000, right, when they purchased it, and now it's worth 3.5 million. Well, now you have appreciation of $3 million. Again. If you went and sold that to a third party, great. You collected the cash, you're out of the property. You pass, Go. See you later. But if you were just to remove it and put it into your own LLC structure, it's still a sale. So now that tax liability is still going to be due, despite the fact that you just kind of just moved it out for your own purposes, and that becomes the biggest issue. And that that's the crux of this question, I think, for this particular person who asked it, is, how can I get around this? So that's the issue. Depreciation, Removing highly appreciated properties is the issue here for most people who are investing in S Corporations. Now, are there ways out of this? How can you mitigate exposure to this? Or is there a clean exit that you can get? That is the question here. Should we jump into that, Nate?
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C
Yeah, let's jump into that. And unfortunately, I don't really think there's an option tomorrow. I don't think there's a real legitimate option. And like, I know people say, well, like, here's my framework, and Wanda will dive into this when it comes to this type of stuff, when it comes to this issue specifically. But the thing is that, like, any time, like, there's no way to do an F re org. We'll go through these options and why they don't work, but you can't do an f reorg. You can't distribute the property without it being taxable. There's no, you can't reorganize it, et cetera. There's just no true way to do it. So if you put property into an S corp, you gotta think about one, how long ago did I put it in? Right. If you did it all in 2025, the likelihood is your appreciation on that property isn't that substantial right now. So you're either gonna have little to no tax to pay. So it's actually an opportunity you could take advantage of there, but overall it's just not possible.
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Yeah, yeah. No, it's not. When you have it in a partnership, right, which is the recommended entity or a single member llc. Okay. The partnership, you can do a tax free distribution of appreciated properties so you're not having to pay the capital gain on it in most cases. There's step ups, there's the drop and swap strategy. There's ways to exit cleanly out of a partnership that are just not available as an S corporation. So should we jump into the F reorg? I think that's where a lot of people try to get to. But we'll see why that may or may not work here.
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Yeah, Tom. So, okay, people say, okay, wait, what about f reorgs, right? Can I do that? Can I get this into a new, a new llc, a new property? And sometimes it might be possible, it might be possible to do a split off type of thing, right, where you reorganize and you, let's say in Tom's example we're talking about earlier, where it's like a bunch of different entities and ownership things happening in one structure. You might be able to split off and do the f reorg for part of it, but you're not actually going to get any elimination of that built in game, which is what everyone's wanting to do, right, Tom?
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Yeah, yeah. So f reorg is when you're basically reorganizing part of the entity. You're dropping down the property into an LLC that is no longer in that entity, and then you're electing an S corporation status on that llc. Long story short, maybe that satisfies the situation for the lenders, maybe satisfies their criteria, so maybe it solves that problem. But in terms of actually getting the property out in a tax advantaged way of actually removing it because it's still trapped in the S Corp ultimately. So that doesn't really work. So what solutions can actually maybe help you? Well, first of all, you can just sell the property to a third party, get it out now. You've liquidated the property and you've avoided the phantom gain from just transferring it to yourself. Now when you distribute the property, if you just distribute the property out of the entity, you're faced with this tax hit, right? It doesn't really work. You could hold it long term indefinitely in the S Corporation. That's certainly an option, but that's usually not where people want to do when they're trying to get the property out of the S Corporation. You could do an installment sale and spread the pain out a little bit. And I guess there's things you could do like you could use the real estate professional status or short term runs a loophole to generate losses to offset the gain. But I'm still not sure that's really what people want to do all the
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time there, right, Tom? No, that's not something people really want to do there. I totally agree with you. And so like you said, it's like the, the one option like is like the one I just mentioned a second ago is where basically if you just put it into the corporation, maybe you can take it out and it's actually going to be a minimal or no tax hit. Depends on the fair market value, right? If you just bought $5,000 property and then five days later you put it in the Escort, we say, hey, take it out. Well, the value hasn't changed in that time frame, right, Tom?
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Yeah, well, I mean, if it was very close put together, if you just put it in recently, perhaps you could take it out and there's gonna be no tax hit, it's gonna be neutral, right? Or very small. But assuming that's not the case, which is all like the biggest issue why we're having this episode today is people put properties in S Corporation, time goes by, the property appreciates, and later on they need to remove the property from the corporation for restructuring purposes. Again, it could be for estate planning, it could be for asset protection purposes. Maybe things got more complex and you're restructuring from that end. It could be for lending purposes. Those are the reasons why I typically see this happening. And because the property has been in there, there's no way to get it out. And we just went through that. You don't have the same benefits as a partnership where you could restructure relatively painlessly. You don't have Those benefits, the f. Re. Org doesn't work for a lot of people who do exploit the f. Re. Org often is not the case. So you're stuck with this tax hit. And the best thing you could do, and I know the answer to this question, is not what people want to hear because they're in this problem, is don't put properties in S Corporation to begin with. That's the answer. And if you're currently putting properties in S Corporation. Stop. Just stop, okay? Get some help, okay? It's not a good idea. Here's the structures you want to use again, and we said this before today. If you're a single investor or you're an individual, you could buy through a single member llc. That's disregarded for tax purposes. And for all intents and purposes, it's going to be as if. As if you owned it in your individual name and you're going to be safe. Okay? Or you could do it as an llc, tax the partnership, because again, there's a lot of flexibility that comes with having a property in a partnership that you just don't get with the S Corporation. And again, I'm not an attorney, but I've worked with enough real estate investors and attorneys over the years to know that there's appropriate entity structures for asset protection that usually involve LLC that are taxed either as. Again, as disregarded or as a partnership that work. Okay, so that's the entity structure you're typically going to go with, right, Dom?
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C
And so I think we've laid this out a bunch of times at this point, but I think the best way to frame it is like, hey, if you are stuck in this position, you go, I got terrible advice. I'm stuck. What do I do? The guy to think through is like one, you bite the bullet today, you bite the bullet a long time from now. Right? And what does that mean? Basically, distribute the property out. One tax factor that I think a lot of people don't realize too, with this is when you distribute it out, there's a portion of it. Basically this is normally capital gain, like it's fair market value, but it's normally looked at as capital gains tax. Typically this distribution is unless it is a depreciable property that goes to yourself, right? You're owner, 100% s corporation, probably, and then you're distributing it to yourself also 100% owner. That means any gain that you have on that, not related to land, but related to the property in and of itself, that's ordinary income. Now, that's not just taxed at 20%. That's taxed up the max 37% bracket in that case. So it makes it even more not great. So you got to factor that in. How much bullet are you willing to bite first off? And then two, if you hold long term, you just basically wait for your. Whoever's your, your inheritors, right? The next generation. Whoever gets that, you lay out an estate plan for them saying you got to liquidate this S Corp and then sell the properties in the same tax year, right. Why? Same tax year you're going to get capital gains from the sale of those properties and then you're going to liquidate the S Corp. And the S Corp stock, liquidation, stock is normally going to be capital losses. So that way it helps you align, right. Whenever you sell, whenever you sell real estate, it's normally 1231 gain, which is normally capital gains in this instance. So that you get the offset in that instance if they misalign.
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Right.
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Let's say you look at it the S Corp 12 31st of December, but then some of the real estate sales carry out of it. That means now you've got taxable, right. Actually probably couldn't happen that way anyways. But that's why you got to have all happen in the same year. So that way you get the best tax figure to make it work. So just FYI on that piece to everyone, another thing too, now, we haven't really talked about other issues. S Corps, you got to file an S Corp tax plan every single year actually, right. So that's something else to think about too. Even if there's nothing going on in it, you got to file an S Corp tax. Just like another administrative headache. The only time S Corps are useful in real estate, in my personal opinion, are if you're a developer, right? You're developing real estate. That can make sense. Or if you're trying to go after what I call land banking, well, not what I call the industry calls land banking and trying to consider a brambless structure, right? You've got land you've held for a long time and you want to capitalize on the fair market value. You're going to subdivide it, do a lot there. We've had episodes on this in the past, probably I think three years ago. Tom. It's been a minute, maybe two. But that's the only other example I really see where S Corps makes sense to actually hold the real estate or if you're going to sell it, right. If you're a flipper, if you're a developer, you build it and then sell it to someone else. That's when it makes sense to do these types of structures. That's the only time it makes sense.
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Yeah. If you're buying a rental property to buy and hold, just don't put an S corporation. Just don't do it. It's just that simple. And hopefully this episode kind of gives some clarity on some of the pitfalls and some of the issues and some of the alternative entity structures that you can use for rental real estate that are more appropriate than an S corporation. But to answer the person who asked this question, the person who sent this question into us, there's no clean way to do it.
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C
Unfortunately, no. Yeah. So look, if we catch this early enough, right, you come work with us and we catch this early enough, then there might be a way that we can actually revoke the S election before we file the tax return. That's possible. Doesn't work every single situation, but that's possibility. Or maybe it's early on enough. We filed one tax return. Fair market value is not super high. We haven't done the cost. Now we can pull it out. There's ways we can do this. There's situations, right. It's not all black and white. If we catch it early on the front end. That's the important part is catching it early, not five years down the road like Tom was saying earlier.
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Yeah. Or you do is you work with a tax strategist from the beginning who could help you make sure that you set up the right entity structure and avoid this whole situation from day one. That's for people who are tuning in who may have not ran into this situation yet. But we did get another question that I don't believe we need to do a full episode on that someone sent us in because we've done the entire rep series already and I'm pretty sure we've covered this ad nauseam here on this show. You go back to the rep series and check it out. But the question was how many rental properties do I need to qualify for the real estate professional status? And it's an age old question. I've been getting this question my entire career as I've been a tax accountant. And the short answer to the question is there is no definitive answer. You need at least one. There's been tax court cases that have substantiated people getting the real estate professional status with as little as one rental property. I don't have the task for case off the tip of my tongue, but it involved A veteran who was retired and I believe disabled. And he basically had like a one, I think a small multifamily property like under four units. And he did all the property management. He was on site all the time. He was always cleaning up the property because it was really messy location. And in that case he was able to substantiate the fact that he was a real estate professional. The tax court sided in his favor and he won. But before you say oh great one rental property, yay. Let's take a look at the facts and circumstances of how he got here. Right. He was a retired veteran who was on the property all the time self managing it, very much involved. It seemed like there's a lot of work to be done and he won. If you're just buying a few turnkey properties or one turnkey property and you're gonna hand it off to a property manager, you're probably not gonna qualify for the real estate professional professional status. You're going to need to be self managing it. You need to be putting in a substantial amount of work. One strategy that we've seen really successful for people who have as little as one property is buying a property that needs substantial renovations and then playing a serious role. Whether you're doing the renovations yourself or you're, you're otherwise playing a very large role in those renovations and then self managing it after that's all complete and the property is being rented out. That can work. That has been an effective strategy that I've seen with as little as one. But to answer your question, how many properties do you need? It could be as little as one if there's enough work. But if it's turnkey, I say you're going to need a substantially more properties to seriously get there.
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C
Tom, I very rarely see people who get the ability to hit 750 hours on one property. Maybe you're going through a major renovation and you're doing all the work yourself. That's you're doing following the burger strategy. That's when maybe I see a potential to do that. But look, there's just not enough time in long term rentals. That's the thing. There's just not to get that to get the hours. Like look, maybe you're going to get it, you're going to do some small improvements yourself. Then you're maybe going to like figure out how to get a tenant yourself and then manage them. Right. But typically look, and I tell all my clients that like hey, if you're, if your rental property is causing you to get 750 hours and you're not doing renovation, you've got a headache, not an asset. Right. So because you, right, like you shouldn't be, you shouldn't be spending that much time on one piece of property and everybody gets that. So you're going to have to grow. There's not like it's like you said, Tom, it could be three, it could be four, it could be 10. Right. All depends on your systems that you have and you've put in place to actually get there. So there's not just one, it could be one, it could be 10. I hate being so vague with it. Like maybe, maybe get around five, right. Maybe you guys can shoot around five. But I'm not saying that's like still a you got it guarantee type thing.
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A
Yeah, yeah, no, for sure, for sure. I think you have to look at it as how much work is it actually going to take you to legitimately operate this property. And sure, like if you bought one big multifamily property with 150 units and you self managed it, I'm sure there's a way to get to 750 hours. But like if you're buying just a smaller property and you're thinking, oh, I was my first long term rental, I'm going to get there, or my first two long term rentals or whatever, it's unlikely and you're facing an uphill battle. So the best answer I could give here is the more properties you're buying or the more work that needs to be done on these properties to manage them, the more likely you are to actually qualify. So you be, be rational, be reasonable, you know, think through it like you were a third party? How would a third party look at it if you came to me and said, I have three turnkey rental properties and I met the real estate professional statistic and say which one of them messed up, you know, which one is causing you all that headache. And what I want to talk around circles here, the bottom line is it depends, but it's going to be all be dependent on the amount of work you have to do. And the bigger the property or the more properties you have, more likely you are to actually get to that point.
- [25:33]
C
Yep, 100%, Tom. Though I think everyone stopped listening as soon as you said, hey, there's one tax court case or so or I can manage an entire rental property and get 750 hours. Everyone said, said, great, I'm gonna go do that right now. They literally started scrolling Zillow.
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A
Yeah, but, but look at that one Case though in the circumstances, in fact, I, I know, right. He was a veteran, a disabled veteran if I'm not mistaken. So I think there might have been some leniency maybe I don't.
- [25:55]
C
It was also triplex and they. He was described like the task force only done this twice in my opinion. Once in a, in a, in a pilot, in a case with a boat pilot, whatever. I don't still understand what that means per se. But they describe both these individuals as some of the hardest workers they've ever seen. And they got to brought in testimony that also said that hey, yeah, this is some of the hardest workers they've ever seen. So if you can get all your friends and family, people who work with you and they say this dude is like literally grinding day in, day out, then task. Okay, we believe you, right? But yeah, guys, super rare. Yeah.
- [26:24]
A
And I'll say this for the most of the people who are trying to qualify for the real estate professional status, you're not in that bucket, right? Who are trying to do this like you're not in that situation. It's just this has been my experience. So bottom line is more properties, the bigger properties, the more work there is to do on it, the more likely you are to qualify. Do speak to a tax advisor to stress test your ideas. And bottom line is it depends. So having said all of that, if you are looking to work with a tax strategist or tax advisor to help you understand what type of entity structure is the right fit for you, can you qualify for the real estate professional status? Is the short term rental loophole the right strategy for you? And any other strategy that can be applied from the real estate or small business or personal side of things. We'd love to learn more about your situation and how we can help. You can fill out the link in the show notes to this episode to schedule a consultation and we will look forward to speaking for you there. Nate, any final words before we close out for today?
- [27:16]
C
Just don't do S Corps without talking to an advisor. Actually if you're doing, you're going to do an S Corp, get a second opinion. Don't just go to your first advisor, go to a different advisor too and get a second opinion. I know that sounds ridiculous, right? It's like a medical condition, but that's how costly this, this mistake could be for you. Yeah.
- [27:32]
A
And we see this all the time. And I remember the last thing I'll say, I remember early on and earlier on I tried to invest. I left no stone. Literally no stone. Unturned trying to solve this for a client everywhere every orgs this. What if we did this, what if we did that and did a complete tear down. I think I even went to other tax professionals just to make sure I wasn't crazy and the answer was there was no good solution and today there still is no good solution. So just don't do it and you'll be in a better place.
- [28:00]
C
I will say Congress once upon a time brought up the fact they might allow a one time ability to convert from an S corp to a partnership. They brought it up once, they never brought it up ever again. So maybe it's like somewhat in the back of their minds, but I highly but seeing they considered it put it on the table and it hasn't been brought up since then means it's probably not going to happen.
- [28:17]
A
Yeah for sure. All right, so that's it for today's episode. We'll catch you on next week's episode of the Tax Smart REI Podcast and as always, Happy Investing. The Taxmount Real Estate Investors Podcast is for general information purposes only and is not intended to provide and should not be relied upon for tax, legal or accounting advice. Information on the podcast may not constitute the most up to date legal or other information. No reader, user or listener of this podcast should act or refrain from acting on the basis of the information on this podcast without first seeking legal and tax advice from counsel in the relevant jurisdiction. Use of an access to this podcast or any of the links or resources contained or mentioned within the podcast show or show Notes. Do not create a relationship between the reader, user or listener of the podcast and the host, contributors or guests. Any mention of third party vendors, products or services does not constitute an endorsement or recommendation. You should conduct your own due diligence before engaging any vendor. For more information, reference the show notes or description of this episode.
- [29:13]
B
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