Posted by KevW Russ Whitney Trainer on June 06, 2001 at 16:28:35:
Here is how to handle the taxes and which legal tools to use to help minimize the taxes.
We teach that for your quick buy-and-sell properties a corporation is the proper legal tool.
For your rental properties a limited partnership or a limited liability company is the proper legal tool.
There are several options for what you can do with some or all of the money:
You can pay yourself the money out of these companies. You will pay the taxes on the money when it is received if you pay yourself as an employee. You will generally pay the taxes on a quarterly basis if you pay yourself as an independent contractor. At first you can use the company called “Paychex.” They are in all states and are very inexpensive for processing payroll.
You can buy things that you want to own with the money. If you buy them with company money and they are tax deductible for business purposes you get a tax deduction.
You can do a tax-deferred (section 1031) exchange. As long as you follow the rules (see tax professional) you will not pay any taxes on the money you roll over to another property.
Hope this is useful to you.
Russ Whitney Trainer
Purchase Option Camp
Los Angeles CA