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2. You should "incorporate" (and I use the word losely) in some fashion either as a "S" corp or LLC ...

Very loosely. An LLC is not a corporation (though it can choose to be taxed as one. Most real estate projects are not corporations in the strict legal definition. They are often LLCs or partnerships.

...The net effect of this splitting of net income is just modestly in favor of incorporation; depending on circumstances a couple of thousand dollars. ...

And depending on the state in question, these tax savings at the federal level are more than offset by the increased cost of additional tax returns (Federal and State S-Corp) and state excise taxes on the S-Corp or LLC.

This is definitely an area where specific local expertise is essential in the decision making process. There is no "one size fits all" solution.

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