Posted by Jason-DTX on November 03, 1998 at 10:56:06:
I’m not a lawyer or cpa, this is just what I have learned.
A “S” corp is taxed more like a partnership, The corp files an informational return and the rest is filed on your personal return. (I’m not 100% sure on this, I use a C corp.) I just know that I don’t want anything with dealer status anywhere near my personal return.
I do know that a land trust is invisible to the IRS. (Bronchick’s site has the IRC #) So if you own the beneficial interest personally then it goes on your return. If a corp owns the beneficial interest then it goes on a corp return.
If you plan on doing a lot of flips then you need to get with a CPA that is experienced with REI.
Jason
Hi everyone! I’m just getting started, but after reading a number of books on real-estate investing, I decided that the liability protection of a corporation might be a good idea. As such, I used “The Company Corporation” based in Delaware to incorporate myself. Having received my corporation forms, however, I am now unsure of exactly what to do next. I know that I need to fill out the “SS-4” form to get an EIN, but, frankly, I found the form terribly confusing and ambiguous. I just graduated from college, so I really don’t have the money at this point to consult an attorney or an accountant for guidance.
Can anyone offer me any advice or help with the next few steps, preferably someone familiar with the process?
I imagine there are probably others out there who would also benefit from this information.
Thanks in advance,
Russ McAllister
To avoid any potential confusion, I decided to incorporate as a “corporation” rather than as an “LLC”, etc. If this was a mistake, please let me know. Thanks!
Re: Question on incorporating… - Posted by David larkins
Posted by David larkins on November 01, 1998 at 13:33:22:
I have just set up a corporation with the same company, and I also am interseted in any thoughts on the “next” steps to take. I know this much…
1)Incorporate
2)Fill out and fax in SS-4
3)Hold initial meeting to adopt Bylaws and decide on officers
4)File as a “foreign” corporation in my State
5)Hold meeting to become Subchapter-S
Now the questions are…
1)Do I sell stock to myself to get money into the corporation?
2)How do I sign for leases, checks, etc…?
3)Does the fact that I am Incorporated preclude me from having insurance on rental properties or a sub-leasing to another tenant?
4)How does the company get properties into the Corporation and out of my name to put a buffer zone between me and the company when the company does not yet have a credit hitory?
Posted by Jason-DTX on November 01, 1998 at 15:19:47:
First if you plan on doing any flips then you shouldn’t elect an “S” subchapter. That way if the IRS classifies you as a dealer, the corp will be the dealer and you don’t want that to flow through to your personal return.
Now some answers are
1)yes
2)sign EVERYTHING with a title following your name (president, secretary, or treasurer) otherwise you could be held personally liable for signing personal.
3)no
4)You can deed the property to the corp in exchange for stock or you can donate it. You need to talk to your CPA before doing this to make sure you do it right and don’t cause a taxable sale.
If you are just starting out you should incorporate in your own state. The advantages of Deleware don’t apply to small corporations. Incorporating out of state is an advanced strategy that probably won’t benifit you right now. Even if you are at the point to have an out of state corp, you usually still have to have one in your state to use the best strategies. Then a Nevada corp would be better than
Posted by Leslie(AZ) on November 02, 1998 at 22:21:33:
If you have an ‘S’ corporation, you are ‘personally’ responsible for the corporation’s taxes? I thought the corp’s purpose was to assume the tax/financial liabilities. I haven’t started learning about corps, so excuse my ignorance, if this is incorrect. I have learned that if you take the property in ‘trust’, that will protect you from being tagged as a dealer as well.