Hi, this is a Real Estate, Self-Employment, and Tax strategy question all in one. I am posting it on the Real Estate Board, and instead of copy and pasting the whole thing, here is the link.
http://boards.fool.com/Message.asp?mid=21967070

I am really concerned about how I will be taxed under different scenarios.

Your taxes under these scenarios are not going to vary much. The different entity forms (sole prop., LLC, LP) provide varying legal protections but don't have a significant impact on the overall tax liability. You will be taxed at ordinary income rates as you are not a passive investor. An S-Corp will have additional tax filing responsibilites (an expense) but all of the federal taxes will be determined and paid on your individual tax return assuming you are the sole shareholder. Some states, however, assess minimum or franchise taxes on S-Corps, LLCs, and LPs, so that may be a consideration. To the extent that you provide personal services to an S-Corp, you should draw a salary which means added payroll compliance expenses (workman's comp, unemployment insurance, etc.).

You should continue your consultations with professionals. Where you are getting differing opinions, challenge them with the alternatives and ask them to explain the (dis-)advantages of their proposal vs. the others. Time and money spent now will be far less than that required to correct a mistake later.

Ira

Ira