Good point regarding losing money while flipping. However, if I go down the wholesale flipping route I will probably have a loss for first year due to startup expenses and the fact that I am starting pretty late in the year. Hypothetically speaking, it could be a profit??? Anyhow, I will apply for “S corp” status to start out and see how it goes. At the end of my first year in business I will reevaluate my corp status and determine based on my experience and how business went that year whether I should remain as an “S” or switch to a “C”.
Should I leave my corp as a C corp or should
I apply for an S corp?
I make a high five figure wage income (f/t job);
Pay pretty high taxes since I am in NYC;
Will probably have tax losses from my re biz (esp. during
first couple of years);
Planning on wholesaling (buy & sell);
Would it make sense to apply for “S” status to offset
any losses versus my wage income? If I wholesale properties
as an ‘S corp’ is the dealer status attached to the legal
entity or to the individual reporting the income/loss on
their return? If in the future I want to become a ‘C corp’
is it easy to switch or is there a waiting period?
I will hire an attorney in the next couple of weeks and
I will run these questions by him/her as well since I have appr.
75 days to apply for ‘S corp’ status. However, any help from
anyone on this site will be appreciated.
Re: Decision to Make - C or S Corp??? - Posted by JHyre in Ohio
Posted by JHyre in Ohio on July 13, 2002 at 06:36:17:
Most professionals would say “take the S” to use the losses…without understanding RE. MY first point would be- if you are doing a wholesale flipping business, how on earth are you producing a loss? Most flippers I know have the opposite problem- too much income, not enough deductions. This is especially true of wholesale flippers, because those guys tend to generate high volume, which means even more income. Now if your volume is low and your deductions high, you might generate a taxable loss- that’s just a bit unusual for flippers, in my experience.
Anyway, choice of entity will involve a DETAILED analysis of your facts…I could see a C, and S, or a LP in your circumstances.