Best structure for Flips with a partner?

[Navid A.]

Hey BP,

I'm currently in the process of restructuring things. What do you all recommend for an entity structure with a partner who's funding the deal? As is, my partner is funding the entire deal while I'm managing the daily operations for a 50/50 split of profits. For this entity, we are using it strictly for flipping with the possibility of holding a few of the completed projects. This would require us to have the ability to transfer or quitclaim the completed project/property into another holding company which will be a LLC.

My partner wants to remain as a "passive partner" to avoid SE taxes to the extent possible on his share of the proceeds. He is not involved in daily operations or decision making. We are looking for both asset protection and tax mitigation. We have it down to 2 option: a LLC treated as a S-Corp for tax purposes or an actual S-Corporation. Which is preferred and why? Please and thank you!