Thanks for the feedback. So even with the weird situation where the land appraisal was higher than my total purchase price, I still need to allocate some value to the building? Would I need to get another appraisal specifically breaking down the components, or can I just make a reasonable allocation myself?

Yes, you definitely still need to allocate some value to the building. The IRS won't accept that a functional commercial building has zero value, regardless of the land appraisal. You don't necessarily need a new formal appraisal, but you should have some reasonable basis for your allocation. I'd recommend looking at the county tax assessment to see how they split land vs. improvements, or checking comparable properties in your area. Many CPAs recommend documenting your methodology in case of questions later. A 75/25 or 80/20 land-to-building split might be reasonable in your case, but have documentation to back it up.

So you're saying the IRS will tax you on depreciation you SHOULD HAVE taken even if you didn't actually get the tax benefit? That seems incredibly unfair. Is there any way around this if OP sells soon?

I've heard about DSTs but don't really understand how they're different from REITs? Are there minimum investment requirements? My financial advisor never mentioned these as an option.

DSTs are fundamentally different from REITs in both structure and tax treatment. Unlike REITs which are securities, DSTs are considered direct ownership in real estate for tax purposes, which qualifies them for 1031 exchanges. This means you can defer capital gains taxes by rolling proceeds from property sales into DSTs. Minimums typically start around $100,000, which is higher than REITs, but that's because they're designed for accredited investors. The tax benefits are substantial - you'll receive K-1s showing your portion of depreciation, which often shelters a significant portion of the cash distributions from immediate taxation. Many financial advisors aren't familiar with them because they require specialized knowledge and typically don't fit into standard model portfolios. You'll want to work with someone who specializes in tax-advantaged real estate strategies for high-income professionals.

I've invested in two Opportunity Zone funds. They do work as advertised tax-wise but be extremely careful about the underlying investments. Many OZ areas are economically distressed for good reason, and some developers are creating poor investments that only make sense because of the tax benefits. The best approach is to find OZ investments that would make sense even without the tax advantages. I found a multi-family development in an emerging area just outside a major city that had strong fundamentals regardless of the OZ benefits. The tax deferral and eventual exclusion is just a bonus.

That's really helpful insight. I was looking at a fund that invests in multiple OZ projects to spread the risk, but you're right that I should be evaluating the underlying economics first. What documentation do you need for tax purposes? My accountant mentioned something about attaching an election statement to my return and filing Form 8997 annually, but I want to make sure I don't miss anything that could jeopardize the tax benefits.

Do you have to track personal miles separately? Or just know the total miles driven in a year and subtract business miles from that?

You need to track both. The IRS wants to see your total miles for the year (odometer readings) and your business miles specifically. The difference is your personal miles. They want documentation showing how you tracked this. Most audits of vehicle deductions focus on inadequate mileage logs. I recommend using a mileage tracking app that automatically logs your trips - much easier than trying to reconstruct it later.

Thanks for sharing your experience. I do expect to maintain high mileage (40-45k) annually for at least the next 3-4 years based on my current clients and service area. I'm leaning toward the standard mileage based on everyone's advice, especially since it seems to provide more flexibility if my situation changes.

Another thing to consider is how long you'll keep the vehicle. If you plan to sell/replace it in 2-3 years, Section 179 might be better. If you'll keep it 5+ years, mileage rate often works out better.

Thanks for this reminder about the tax treaty! I'm from Singapore and I believe there is a tax treaty. Do you know if I need to file any special forms to claim tax treaty benefits? And how exactly do I track my physical presence - is there an official way to document this?

You would need to file Form 8833 to claim tax treaty benefits. This form reports treaty-based positions that affect your tax liability. For Singapore specifically, the treaty has provisions covering business profits, but you need to determine if your income qualifies under the permanent establishment rules. For tracking physical presence, I recommend keeping a detailed log of all your international travel. Save boarding passes, entry/exit stamps in your passport, and any other travel documentation. The IRS doesn't provide an official tracking method, but during an audit, they may ask for proof of your whereabouts. Some people use apps like TravelTracker or Taxday to help with this. The important thing is to have documentation of every day you were outside the US.

This is a really important point. I have a Delaware LLC but live in California, and I got hit with a surprise $800 minimum franchise tax my first year because I didn't understand the state requirements were different. OP should definitely check Texas requirements even though they don't have state income tax.

Be careful with recording conversations! Depending on your state, you might need the other person's consent to record them. Some states require both parties to consent to being recorded.

Good point, hadn't thought about the legal issues with recording. I'll stick with taking notes after the meeting.

That's a really good point I hadn't considered. So I should be tracking these early expenses separately as startup costs? Does that change what documentation I need to keep?

Yes, definitely track these early expenses separately as startup costs. The documentation requirements are the same (receipt, who you met with, business purpose), but the way you'll claim them on your tax forms will be different. Keep a clear record showing these expenses were incurred before your official launch date. This helps establish that they're truly startup costs. Once your charity is fully incorporated and operational, you'll want to have a clean break in your accounting to show when regular operational expenses began. This distinction can be important if you're ever audited.