Some generate rents taxable on Schedule E. etc...Here is a link to a thread in which I discussed it: http://www.biggerpockets.com/forums/12/topics/76052-simple-taxation-questions-Steven

When you use them to run an active business out of your 401k - the gains will be subject to UDFI tax at about 35%.

SEV is not a common, nationally used term in property taxation world.

That would mean a capital gain tax of 200,000 PLUS state tax of 5% = 50,000.Personal tax total: 250,000Total tax on dividend/ distribution = $563,841.This is why it is considered malpractice in some states to advise holding real estate in a C-corp.You LOSE the Long Term Capital Gain Rates with a corp.You will pay tax at the corporate rates:TAXABLE INCOME: TAX:Over But not over Tax +% On amount over$ 0 $ 50,000 $ 0 15% $ 050,000 75,000 7,500 25% 50,00075,000 100,000 13,750 34% 75,000100,000 335,000 22,250 39% 100,000335,000 10,000,000 113,900 34% 335,00010,000,000 15,000,000 3,400,000 35% 10,000,00015,000,000 18,333,333 5,150,000 38% 15,000,00018,333,333 ............ ............ 35% 0Skewed Step up in Basis for HeirsNow, lets say you keep that Rental property in the corporation forever, Yes you can 1031 into something else; however, your kids will not receive much of a benefit as the deemed sale of ANY transfer will cause taxation.

Rik,I recommend finding an accountant who specializes in real estate taxation.

@Keith Nelson the answer to your question lies with answering two more questions: (1) how much do you know about taxation in relation to rental real estate; and (2) how much time are you willing to put into researching the tax code to ensure your return is compliant with the regs?

If you had $5M in personal assets and knew that those assets were at risk if you got sued by a contractor who fell off a roof or a tenant who got carbon monoxide poisoning in your rental, you might decide to preemptively ensure that your liability was limited or eliminated.A business entity is one way to help do that.On the other hand, if you don't have a penny to your name, and you don't have any additional income you're trying to shelter from taxation, by all means do everything in your own personal name.There's no one right answer...

Which then, essentially, means $3,000 cash-flow for the year before taxation ($250x12).Again, I’m trying to learn more about the financial planning aspect, and I know this is a fairly simple example.

What's more, this punishes crime more than any justice system could, because illicitly attained gains would be subject to tax at the same levels that legal profits would be, removing a large part of the incentive for the illegal activity.

Thomas Jefferson knew that consumption was the best for of taxation- (see http://duckduckgo.com/?