Setting up a corporation for note investing

[Donald D Michna]

I have been doing research to set up a corporation. I think that an S-Corporation would be the best setup, but I see that no more than 25 percent of the gross corporate income may by derived from passive income. I also see that financial institutions that are banks can not be an S-corp. Being a note investor you are in all reality a bank.

I am not looking at a C-corp obviously due to the double taxation.

I plan to talk to speak with a lawyer about this but wanted to get some feedback from some other note investors out there. 

[Dmitriy Fomichenko]

You can be the lender (note investor) as an individual without setting up any entity. What are you trying to accomplish by setting up the entity? Typically entity is used to limit the liability and help with taxation. Being a lender presents very little risk so I'm not sure you are gaining much by using the entity rather than lending personally...