Share this page!

Mitchell Baldridge Profile picture
Twitter logo
2 Dec, 7 tweets, 2 min read
I spend a lot of my time in life thinking about personal finance and tax optimization.

See my longer tweets in a thread of threads below. I’ll keep this pinned and updated as I continue sharing ideas.
A thread about pairing SMB gains and RE losses for tax efficiency.
The magic of recurring revenue
SMB tax strategies
Tax and retirement planning
1031 exchanges
Tax passive loss rules

• • •

Missing some Tweet in this thread? You can try to force a refresh
　

Keep Current with Mitchell Baldridge

Mitchell Baldridge Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @baldridgecpa

Mitchell Baldridge Profile picture
22 Nov
Passive loss rules keep showing up on #RETwit

The tax shelter of real estate can be a huge savings, but losses won’t help one bit if you can’t use them.

You need to know the rules - whether you have a RE side hustle or you are a GP understanding your investors.

Thread ⬇️
Tax all starts with the types of income

1. Active - income earned from Material Participation. Whether it be SMB, W-2, contract income, or prof real estate.

This is income where ordinary tax is paid and losses offset other income. Other sources have certain loss limitations.
2. Portfolio - income derived from financial instruments - dividends (including REIT), interest, royalties and capital gains.

Mostly income w/out loss potential, and favorable tax rates.

Cap losses may offset cap gains w up to 3,000 loss. Investment interest can be deductible.
Read 14 tweets
Mitchell Baldridge Profile picture
8 Nov
A lot of talk on #RETwit about 1031 exchanges, and for good reason.

Exchanges are a fantastic tool to grow wealth over a lifetime and even a great estate planning tool in passing tax free, stepped up wealth to your heirs.

Explanation of theory, execution and more. THREAD👇🏼👇🏼
WHAT -

A 1031 exchange refers to Sec 1031 of the Internal Revenue Code relating to “Nonrecognition Of Gain Or Loss From Exchanges Solely In Kind”.

The principle behind the exchange is deferral of basis and tax, so you can compound wealth tax free.
A property can be sold, and tax can be deferred by exchanging the property for another similar property or properties that better fits your needs.

The deal sounds like a no brainer - Sell, take a gain and don’t pay tax. The catch is you have to meet certain rules.
Read 19 tweets
Mitchell Baldridge Profile picture
27 Oct
Owning and operating a SMB is the best tax deal in America.

—

Whether you have a $10,000 side hustle or $10MM enterprise, earning business income opens up amazing opportunities for tax savings and wealth creation.

Let’s walk through how it works
(thread below ⬇️)
Expenses -

Business income opens up an opportunity that W-2 employees do not enjoy - bonafide business expenses.

Of course direct costs incurred are deductible, but many expenses exist in your life already. When you have business income you get to spend them before tax.
Most employees are running a no deductible office at home - now claim business phone bills, home office utilities, dues, travel, education and legal that you spend regardless.

The other deduction opportunity is business use of your personal assets including auto and home use.
Read 9 tweets
Mitchell Baldridge Profile picture
24 Oct
Agree 100% - there are a million reasons to love this idea and it’s the fastest growing part of my business.

1. Charge money every month on the first of the month. What could be better?

(See reasons 2-493 below👇🏻)
2. Ease of collection - we use @PaySimple to auto bill clients. Client signs an engagement letter and billing auth and we bill monthly on the first. No waiting, no accounts receivable, no uncollectibles.

3. Smooth cash flow - really nice for a seasonal business like ours.
4. Guaranteed cash flow - I have not had one client fire me from the monthly service. There were a few modifications and concessions during lock down, but having ongoing cash flow helped keep my business (and clients who employ MRR models) healthy during March - June.
Read 9 tweets
Mitchell Baldridge Profile picture
20 Oct
Going to try my hand at the long form thread - very open to ideas and feedback:
—

This is what I am starting to do in my life, and a great tax strategy for business owners and even high income W-2 folks.

Here’s how and why:
If you are a high earning individual with a job or business you are not able to take passive real estate losses.

As a single person that makes 200k, you would not be able to deduct losses generated by your rent house, building, etc. against ordinary earnings.
If you want that sweet tax deduction you need to become a pro - how do you do that? Pass the real estate exam?

Not necessarily. The IRS defines a real estate pro as someone who BOTH
Read 19 tweets

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!

Follow Us on Twitter!

Like this author's thread?

Get emails when @baldridgecpa has new unrolls!

Check out other threads from @baldridgecpa!

Read all threads by @baldridgecpa