Message Font: Serif | Sans-Serif
No. of Recommendations: 4
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.

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.


Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.