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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28082
Experience:  Taxes, Immigration, Labor Relations
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Best business structure houses, when the business generates

Customer Question

Best business structure for flipping houses, when the business generates over 0.5M-1M in profit per year?
Submitted: 9 months ago.
Category: Tax
Expert:  Lev replied 9 months ago.

Houses would be treated as inventory - so profit will be classified as business income.
There is no "best business structure" - all depends on circumstances .

For instance if most proceeds will be distributed to physical persons - some tax saving would provide S-corporation.

However - if you want to keep funds in business for future investments - C-corporation is preferable.

You might want to have more complex structure.

But there is no one solution to fit all purposes.

Customer: replied 9 months ago.
what questions do you need me to answer to determine the ultimate plan here? I need a real life plan. Also, I am not opposed to having multiple business (who pay each other, invoice each other, whatever) for tax liability purposes.
Expert:  Lev replied 9 months ago.

If we run the business as a partnership - all taxable income will be passed to partners.
I assuming four partners - so each will realize $125k - $250k net self-employment income

Expert:  Lev replied 9 months ago.

Let assume for simplicity $250k, single, no dependents, standard deduction, no other deductions or credits.
Estimated tax liability
Regular Income Tax: $59,178
Self-Employment Tax: $21,389
Medicare SurTax: $449
Total tax liability - $81,016

So that would be a starting point - and we may try different structures and verify HOW that will affect total tax liability.

I am not asking questions - but making assumptions - do you agree?

Please be sure to communicate so we will be working on your tax related issues.

I am sending you an additional offer to discuss your issues over teh phone.

Please verify and accept.

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