How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Lane Your Own Question
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12213
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
1929974
Type Your Tax Question Here...
Lane is online now
A new question is answered every 9 seconds

i have a 4 family house in a s corporation i have been putting

Customer Question

i have a 4 family house in a s corporation i have been putting out a lot of my personal money to improve building i was told any profit has to stay in the corp i was thinking if it is better to sissolve corp and take out a liability to cover any suing and free up some of my money. i also want to re=finance to a 15 year term this is a s corp what do you think
Submitted: 4 years ago.
Category: Tax
Expert:  Lane replied 4 years ago.

NPVAdvisor :

Hi,

NPVAdvisor :

I want to make sure we're on the same page ... With an S-corp, you're taxed on the profits whether you take them out or not ... it's only the C-Corp that you can decide NOT to distribute dividends and not pay tax

NPVAdvisor :

An S-corp is a pass-through (like a sole proprietorship, an LLC and a partnership) Only C-Corps and IRRevocable trusts pay their own taxes ... (at corporate and trust tax rates, respectively)

NPVAdvisor :

Now, as the owner, you WILL have a capital account that establishes your basis in the company and that over time is essentially accounted for like this:

NPVAdvisor :

Original Cost
+ Improvements
+ Purchase costs
+ Selling costs
- Depreciation
= Adjusted Basis

NPVAdvisor :

Typically the S-corp is the best of both worlds in may ways,... the rental expenses, etc reduce your taxable income,,, AND the capital improvements you make increase your basis (BUT because it'

NPVAdvisor :

s still a corporation... there's that liability protection a LEGAL (state law issue, not really related to taxes) separation of your personal and business assets

NPVAdvisor :

I still don't see you coming into the chat, SO I'll move us to the "Q&A" mode ... Maybe that will help ... In the men time, you might want to take a look at this: http://www.mondaq.com/unitedstates/x/190688/Income+Tax/IRS+Rules+S+Corporations+Rental+Income+Is+Not+Passive

NPVAdvisor :

Let me know of you have further questions

NPVAdvisor :

BUT

If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better … That's the only way they will pay us here.

HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question.

NPVAdvisor :

Let me know

NPVAdvisor :

Lane