Posted by Rich[FL] on January 16, 2003 at 11:11:58:
Short answer: use a C-corporation and take the money out pre-tax via various benefits and defined pension plans.
Long answer: there’s tons of information about this in the archives. It depends on what structure you’re using to do the flips. If you dont’ use the right structure, you won’t pay capital gains tax, you’ll pay Federal tax at your marginal tax rate PLUS you’ll also have to pay self-employment tax of around 15%. This is what will happen if you get tagged as a “dealer” by the IRS; the other bad thing that could (some say would) happen if this occurs, any other long-term sales you’ve made would get recharacterized in this manner and you’d be forced to pay these same taxes.
Search the archives under “flips” and “dealer” or “dealer status” and you should find more than what you ever wanted to know!
Good luck!
Rich