All Forum Posts by: Steven Dicker

Joe:

I have been trying to reconcile the tax savings in your example and cannot. Under an LLC, SE taxes would be $18,360 (120,000*.153). Taxable income would be $120,000 less $9,180 (1/2 SE tax) or $110, 820. Total tax of $40,161 leaves $21,801 income tax or 19.7% of $110,820.00

Under S-Corp scenario, K-1 would be $70,000 - $7,650 (Fica) or $62,350. W-2 would be $50,000 for a total of $112,350 in taxable income. Income tax of $25,624 would be 22.8%. Where am I going wrong?

Also is the basis for taxable distributions retained earnings?

If you are in the business of property development, are sales of homes held over one year considered capital gains, or ordinary income? Also, do you depreciate rehabbed property that you rent?

Thanks,

Steve

This is a question for Joe: If you are in the business of property development, are sales of homes considered capital gains, or ordinary income? Also, do you depreciate rehabbed property that you rent?