Posted by JHyre in Ohio on December 18, 2002 at 08:33:10:
Such questions turn on lots of details…anything you see here is merely a general guideline,nothing more. You wish to enter into two activities that normally call for different types of entities…but ony want one entity, presumably to conserve costs. Assuming that the savings are greater than the price paid for using one entity where two is normally ideal, I’d pick the entity that the numbers say works best…if the business is primarily flipping, a corp (probably “S”) or LP, if rentals, probably an LLC or LP. All things being equal, I’d PROBABLY pick the S-corp…helps control SS taxes and shouldn’t distort income on buy and hold properties too much. But one entity is a stopgap…why not just one? Because two different kinds of business do not necessarily call for the same tax benefits, as my article explains.
John Hyre