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  • Aaron

Passive Investor Series Part 10: What's Up With March 15

This post originally appeared as the writer's LinkedIn "Passive Investor Pet Peeves" series. It has been re-posted and edited here with permission.


March 15th. This day has come and gone without much fanfare. What is significant about this date? Not only is it the day Justin Timberlake released his 3rd album โ€œThe 20/20 Experienceโ€, but it is a much more important date for tax filers.


๐Œ๐š๐ซ๐œ๐ก ๐Ÿ๐Ÿ“ ๐ข๐ฌ ๐ญ๐ก๐ž ๐๐š๐ฒ ๐›๐ฎ๐ฌ๐ข๐ง๐ž๐ฌ๐ฌ๐ž๐ฌ ๐œ๐ฅ๐š๐ฌ๐ฌ๐ข๐Ÿ๐ข๐ž๐ ๐š๐ฌ ๐š ๐ฉ๐š๐ซ๐ญ๐ง๐ž๐ซ๐ฌ๐ก๐ข๐ฉ ๐จ๐ซ ๐’ ๐œ๐จ๐ซ๐ฉ ๐š๐ซ๐ž ๐ซ๐ž๐ช๐ฎ๐ข๐ซ๐ž๐ ๐ญ๐จ ๐Ÿ๐ข๐ฅ๐ž ๐ญ๐ก๐ž๐ข๐ซ ๐ญ๐š๐ฑ๐ž๐ฌ. ๐€๐ฌ ๐š ๐ฉ๐š๐ฌ๐ฌ๐ข๐ฏ๐ž ๐ข๐ง๐ฏ๐ž๐ฌ๐ญ๐จ๐ซ ๐จ๐ซ ๐ฉ๐š๐ซ๐ญ๐ง๐ž๐ซ, ๐ญ๐ก๐ข๐ฌ ๐ข๐ฌ ๐ฐ๐ก๐ž๐ง ๐ฒ๐จ๐ฎ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ซ๐ž๐œ๐ž๐ข๐ฏ๐ž ๐ฒ๐จ๐ฎ๐ซ ๐Š-๐Ÿ ๐Ÿ๐จ๐ซ ๐ญ๐š๐ฑ ๐Ÿ๐ข๐ฅ๐ข๐ง๐ .


Out of all the syndications I'm invested in, I've received a total of one K-1 and have been advised by many others to plan to file an extension.


As a passive investor in real estate syndications, it is typical and expected to file a tax extension while waiting for the K-1s. While not a deal breaker, it is a slight annoyance to have to wait for these statements because I want to get my taxes filed and out of the way. ๐ˆ๐Ÿ ๐ฒ๐จ๐ฎ ๐š๐ซ๐ž ๐œ๐จ๐ฎ๐ซ๐ญ๐ข๐ง๐  ๐ข๐ง๐ฏ๐ž๐ฌ๐ญ๐จ๐ซ๐ฌ ๐ง๐ž๐ฐ ๐ญ๐จ ๐ฌ๐ฒ๐ง๐๐ข๐œ๐š๐ญ๐ข๐จ๐ง๐ฌ, ๐ญ๐ก๐ž๐ง ๐ญ๐ก๐ข๐ฌ ๐ข๐ฌ ๐š๐ง ๐ž๐ฑ๐ฉ๐ž๐œ๐ญ๐š๐ญ๐ข๐จ๐ง ๐ญ๐ก๐ž๐ฒ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ž๐ฑ๐ฉ๐ž๐œ๐ญ ๐ข๐Ÿ ๐ฒ๐จ๐ฎ ๐š๐ฌ ๐š๐ง ๐จ๐ฉ๐ž๐ซ๐š๐ญ๐จ๐ซ ๐๐จ๐ง'๐ญ ๐ ๐ž๐ญ ๐Š-๐Ÿ๐ฌ ๐จ๐ฎ๐ญ ๐จ๐ง ๐ญ๐ข๐ฆ๐ž.


As an operator, I can understand there is a lot to do in the business and getting taxes completed may not be high on the priority list. It's easy to think that the investors can file an extension and buy some time with that. However, ๐ซ๐ž๐ฆ๐ž๐ฆ๐›๐ž๐ซ ๐ญ๐ก๐ข๐ฌ ๐ข๐ฌ ๐š ๐ฌ๐ž๐ซ๐ฏ๐ข๐œ๐ž ๐›๐ฎ๐ฌ๐ข๐ง๐ž๐ฌ๐ฌ ๐š๐ง๐ ๐ฉ๐ซ๐จ๐ฏ๐ข๐๐ข๐ง๐  ๐ฌ๐ž๐ซ๐ฏ๐ข๐œ๐ž ๐ญ๐ก๐š๐ญ ๐ฌ๐ญ๐š๐ง๐๐ฌ ๐จ๐ฎ๐ญ ๐Ÿ๐ซ๐จ๐ฆ ๐จ๐ญ๐ก๐ž๐ซ๐ฌ ๐ข๐ฌ ๐ฐ๐ก๐š๐ญ ๐ฐ๐ข๐ฅ๐ฅ ๐ ๐ž๐ญ ๐ฒ๐จ๐ฎ ๐ฆ๐จ๐ซ๐ž ๐›๐ฎ๐ฌ๐ข๐ง๐ž๐ฌ๐ฌ. Maybe you get K-1s out on time, but others don't; therefore, your passive investor still can't file on time. But, this does set you apart as a more organized and thoughtful operator. ๐‘ป๐’‚๐’™ ๐’‡๐’Š๐’๐’Š๐’๐’ˆ ๐’Š๐’” ๐’๐’๐’• ๐’”๐’๐’Ž๐’†๐’•๐’‰๐’Š๐’๐’ˆ ๐’•๐’‰๐’‚๐’• ๐’„๐’๐’Ž๐’†๐’” ๐’๐’–๐’• ๐’๐’‡ ๐’๐’๐’˜๐’‰๐’†๐’“๐’†, ๐’˜๐’† ๐’‚๐’๐’ ๐’Œ๐’๐’๐’˜ ๐’•๐’‰๐’† ๐’‚๐’๐’”๐’˜๐’†๐’“๐’” ๐’•๐’ ๐’ˆ๐’†๐’• ๐’•๐’‰๐’Š๐’” ๐’…๐’๐’๐’†.

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