Augusta Rule Explained by a Tax Attorney (and how Tax Court views the Loophole)

[@jefrytoro7182]

I enjoy your content! Thank you for sharing your experience with us!

[@Kyzyl_Tuva]

Thank you for the work you do. It is so helpful and very well presented

[@JulioRamos-hg8dv]

As always impeccable exposition on this matter.

[@shutsquad]

Why did I find that so riveting and informative? Also, I'd like some clarity on what you mean by "support". I'm not sure what you were referring to. Ty for the content.

[@billb.7346]

I live in the Augusta Georgia area and there are some homes that do get paid $3000+ rent per day during The Masters tournament but they are the top end. Obviously location, number of beds vs bathrooms are a big factor. But also how many other homes in the neighborhood are using the same event company to handle the rental. The more homes the better because the logistics are much easier for them to be able to offer entertainment and food so they can command top dollar from their clients.

[@gunsite45]

She's saying that is fine... The trouble comes in when the same person plays both sides. Like you can't rent your own property to yourself at high rates to cheat taxes.

[@CobaltLobster]

Simple rule of life... And I don't need an IRS code for this: If it's too good to be true, it is.

[@krispinlihme529]

We've been renting our secluded lake front home for weddings. We rent the place for one day and at a rate of $10k for that day. Of course the tent guys and other preparatory people are here the day before, setting up, and the day after to tear down and clean. We've been averaging 9 days per year for a bunch of years. We are below the average venue rental value and we are not renting to related people or businesses. Never received a 1099 and never claimed the income. Someone did send us a 1099 for something else, not related, and we received it after filing on April 14th. We quickly amended that return and there was no difference on monies owed. Of course the IRS audited. Told the Auditor of our wedding income. She said we were great. Found a minor mistake and wrote us a check. Life is good.

[@MH-dm4qc]

And then you woke up from that dream??? I’m too afraid of the IRS to screw around 😭😭 they will jail yo ass if you owe them money

[@osvaldowesly9993]

I don’t know too much about taxes and financial things but boy is this lady attractive!

[@Da_Crow]

can i write off my office if i have LLC in california?

[@samwill226]

I own a small insurance agency. I just wanted to do like $700 a day based on other meeting rental places around me. Once a month, am I still at high risk? I'm a single owner but I "can" have my employees over for a training for a few hours. I also typed up a rental agreement based on a 14 day rental for $700 per day. How risky is it for me to do this? Basically $8400 a year/$700 a day for 14 days to the tenants discretion.

[@K7ZHK]

I’m going to assume that what she meant is that anyone using this will throw off some kind of flag in the system since it’s usually a transaction with yourself or your own company. As long as the amount is the fair market value and you keep very detailed records you’ll likely be fine. Most of us don’t know when we are audited because they don’t see anything worth pursuing.

[@samwill226]

@@K7ZHK Yeah I just need some tax breaks and I don't make much at all. I was figuring $700 was what those daily meeting places cost around me on average so used that number. I have two employees, one is an in-law so I have no issue doing something work related here once a month.

[@RealHankShill]

@@samwill226i would look at what similar rentals to your house cost on airbnb and others for the dates used. If you think about it from a business point of view, thats how a business might rent a private residence. The problem with using meeting halls, is your house isnt a meeting hall. I would try to appraise it based on other private residence rentals in your area.

[@gunsite45]

Crazy, i know one of the doctors in that planet fitness case!

[@Brian-ve6kv]

The IRS clearly disagrees with you. Per IRS Pub 538 on accounting methods: "Related Persons: Business expenses and interest owed to a related person who uses the cash method of accounting are not deductible until you make the payment and the corresponding amount is includible in the related person's gross income."

[@taxleverage]

IRS Publications are not law, they are IRS favorable rephrasing or summarization of the law. The actual law, in order of authority, is statute, Treasury Regulations, and court cases. The law that your quoted publication section is attempting to summarize is IRC 267(a)(2) and it states that " *If by reason of the method of accounting of the person to whom the payment is to be made* , the amount thereof is not (unless paid) includible in the gross income of such person, and at the close of the taxable year of the taxpayer for which the amount would be deductible under this chapter,...then any deduction allowable under this chapter in respect of such amount shall be allowable as of the day as of which such amount is includible in the gross income of the person to whom the payment is made..." The Augusta Rule rent payment is not includible in gross income by reason of statute in 280A(g), NOT "by reason of the method of accounting," therefore this statute does not prevent the deduction even if it is made between related parties.

[@Trademarkboss]

@@taxleverage consider recording a video about what consists of tax law. Maybe title could be "How I know my sh*t" 😅

[@jameszeris5418]

However, I think your videos are excellent keep it up and I agree with you these people with their EA they come on here and start saying that they are the top experts and Tax, which is really nonsense

[@jameszeris5418]

As a CPA I do have three years of law and LLM classes. I understand what you’re saying, but I have talked to many CPAs with no Law School with an MST and frankly they top-notch.