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Updated almost 9 years ago,

User Stats

4
Posts
0
Votes
Nancy Smith
  • Real Estate Investor
  • Colorado Springs, CO
0
Votes |
4
Posts

commission vs salary

Nancy Smith
  • Real Estate Investor
  • Colorado Springs, CO
Posted

hello to everyone out there.  This is my first time asking a question.

I have a C-Corp with an asset management company under it which owns a portion of my individual LLC. Currently we are not making money in the business and in our corporate book/minutes we have stated that we will not take a salary for five years.

my question is we are in the middle of a flip and I wanted to know if I can pay the three owner/members a % of the sale as a commission based on a 5%-20% rate depending on the profit from the sale even if we are not receiving a salary currently.

if we can do this how do I account for the commission paid to each and what form do I need to fill out at the end of the year for each of us to report the income on our individual taxes? 

I do know that I need to fill out a 1099-MISC form for our friend (who is doing a lot of work for me) who will receive a commission of the sale as an independent contractor.

Any advice or suggestions would be greatly appreciated.  My CPA was not very informative on the question.

Thank you

Nancy Smith 

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