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Updated about 9 years ago,
Avoiding Self Employment Taxes
I wanted to see if anyone has been able to (legally) avoid paying self employment taxes on the profit from their flips. I met with an accountant and he said I would have to pay a 15% tax for self employment - essentially the 7.5% an employer would withhold for social security, medicaid, etc. as well as the 7.5% contribution an employer makes on their employees behalf.
I asked if it were possible to categorize the profit from a flip as a short term capital gain, therefore avoiding the 15% tax, but he said that it wasn't possible given the fact that it was not a passive investment - essentially I've established this type of work/investing as my primary job and was actively involved in it.
I just wanted to see if was possible to avoid this tax at all or if it is some thing I will always have to anticipate.
Thanks,
Kyle