getting paid and avoiding taxes

[Drew Poniewaz]

I have been reading alot about taxes and 1031s but i never seem to see anything on how you pay yourself without having to pay the higher tax rates for gains and profits. My thoughts are that you can pay yourself off of the profits of a flip and invest the rest into the next one as a 1031 to keep business rolling. Is this what everybody does? Am I just asking the obvious? Or is there something that I am missing? Is there a podcast that would speak to this subject?

[Wayne Brooks]

Profit from a flip is taxed as ordinary income, including SS/Med, period. No way to change it. The only option I know of is of your entity is taxed as a sub S corp., pay yourself a reasonable salary, say $40-50k, taxed as payroll, and any profits above that would be taxed as ordinary income, but without SS/Med. A 1031 can't be applied to a flip.