enlightenment said:
I did not collect sales tax from anyone in NY during this period
JUNE-DEC, but I did register for the resale certificate at the same
time I formed the LLC in nov in case I wanted to. I understand if you hold an office of some kind in the state you must charge those residents tax, so if anything I will pay it out of my pocket as there were only a few customers from the same state
If the service you provide is taxable, then you should collect and remit the sales tax. If not, and you are discovered, you're simply going to be subject to penalties and interest in addition to the tax due. I understand it may be immaterial to you, but you are in violation of the law and it's only going to cost you unnecessarily if you have to deal with it under audit.

self employment tax - I believe the rate is 15% and change I have to
pay to ss and Medicare. As I look into it more the S corp is more
beneficial since I could pay me a salary of say 50k and do dividends
of 50k which I will only be taxes 7% but I think its too late to
change this as the year has ended but even with this half of tax cut
is a s corp what I want?


So the main question is, what advice would you give me in regards to
the s corp vs self proprietor issue with self employment tax, is there
a loophole, should I hire independent employees and create forms for
them? Is it late to to change the structure as I understand an LLC can
elect to be taxed as an S corp
We cannot tell you if a S corp is what you want, but avoidance of some social security tax is an oft-perceived benefit of an S corp over the self-employed person. I cannot opine on the acceptability of specific amounts, but as long as you pay yourself a reasonable wage in the S corp, you can avoid SS if that is something you want to do. It's not that the rate changes, only the amount subject to that withholding.

I really don't know what you are referring to when you mention hiring independent employees and creating forms for them. It doesn't seem to have any relevance to your questions.

No, it may not be too late to file your S election. You have approximately 75 days after the beginning of the tax year in which you want the S election to take effect to file the election. So if the LLC was formed on Nov 1, then you should have until about Jan 15 to get it filed. You'll need to file Form 2553. You really should check with a local accountant to confirm based on your specific facts and circumstances. Even if you end up missing (or have already missed the cutoff) the ability to file for relief and receive acceptance of the late election is available.

korins said:Hello,

I understand there is a wash rule the IRS imposes, restricting the re-purchase of identical assets within 30 days of selling them. I have a small Vanguard REIT in a taxable account that took a substantial loss last year. I'm considering selling to realize the loss, because something I read suggested that the wash rule doesn't apply if you re-purchase in a tax-sheltered account (e.g. Roth IRA for me). Can anyone verify this?

As a secondary question... I expect to be in the 15% bracket this year, allowing 0% long term capital gains tax. Will any realized loss that's unable to be allocated to LT gains, then offset income? Or will the loss just rollover to next year, again unable to offset LT gains, since there won't be taxed 2008-2010? I'm confused...

Thanks!
The wash sale rule does not restrict the purchase of shares after selling them. All it does is postpone the claiming of any tax benefit resulting from a sale at a loss until the replacement shares are sold.

Until just a few days ago, there was great debate about whether purchasing replacement shares in a tax-sheltered account triggered the wash sale rule. Recently, the IRS issued Revenue Ruling 2008-5 which outlines their position that the wash sale rules does apply in such situations (and that any tax benefit will be lost, not just postponed).

I guess the debate has not really ended. Some people think that the IRS is very wrong. But if you don't want to volunteer to challenge the ruling in court, you would be best advised to either wait the 30 days or perhaps find another REIT to invest in.

Nothing has changed about the rules for offsetting capital gains with capital losses. You must first offset long term gains with long term losses (even if those gains would have been taxed at 0%). Then you must offset short term gains with short term losses. If you have a net long term gain and a net short term loss (or vice versa), you must offset the gain with the loss. If you still end up with a net capital loss (all of your capital losses -- short and long term -- exceed your capital gains), then you can still use the first $3000 of those losses to offset ordinary income and carry the rest over.