All Forum Posts by: Bill Walston

Sam W.,

What Steven Hamilton II said ;)

To issue (or not issue) Forms 1099 seems to be one of the most frequently asked questions by landlords during the tax season. And though I'm all for NOT filing any more paper work with IRS than necessary you can always follow the old rule "when in doubt, send it out." :) Although there are penalties for FAILING to file a required form, there is nothing that prevents you from filing a Form 1099 when it's not required...

Aaron Junck, it's "looked at as self-employed vs capital gains" because income from "flips" is considered income from a trade or business. In other words... earned income. Capital gains occur when you sell a capital asset or an investment.

Thanks for the heads up Stanley Crawford - I wasn't aware that the software would differentiate personal residence v investment property.

I still stand by my statement that this is not the place to report the flips. Homes purchased to flip are not investment property. Unless, of course, the software makes that distinction as well :)

Stanley, I would be willing to bet that the "sold a home" section refers to the selling of a personal residence. This is definitely NOT where you would report income from flipping homes. Income from 'flips' is considered earned income and would be reported on Schedule C. In addition to the income tax you will owe self-employment tax on the net income from your flips.

Charles - Don't be looking for a refund from another state unless you PAID estimated taxes to that state during the year... Which I find most investors do NOT do :)

I think Ned Carey has the right approach. It's a simple matter to get an EIN for the title holding trust. Here in TN we can use the name of the trust .. we don't have to use the beneficiary name at all...

While legally 'OK' I don't recommend it. The IRS will likely "impute" interest on the loan from the shareholder and impose an income tax to him on the imputed interest.

The obvious way to avoid imputed interest is for the shareholder to charge the minimum interest rate on all loans made to the S-Corp. The IRS establishes the minimum interest rates, which vary depending on the size and the term of the loan. You can find the rates at the IRS website.

It may pass scrutiny but it would still be ordinary income subject to SE tax.. which I THINK is what the OP was trying to avoid by proposing the master lease idea :)

I think you would have an issue if one puts in more capital than the other and you attempt to split the stock 50/50. Some may look at this as a gift from one shareholder to the other since they would end up with equal ownership in the company. And unlike limited partnerships and limited liability companies, shareholders of S-corporations must divide the corporation's net income in strict proportion to their share of ownership. If a shareholder has contributed exactly one-third of the company's capital, then exactly one-third of the company's net profit or loss must be allocated to that shareholder.

Your idea of contributing the same amount of capital and treat the funds from your "money guy" as a loan is a good one :)

What's the use of the property Angie? If it's rental property then the expenses would go on your Schedule E (or the appropriate form for your business entity reporting the rentals).

Hope this helps.