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David Spinnenweber
  • Pittsburgh, PA
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I am thinking C-corp....

David Spinnenweber
  • Pittsburgh, PA
Posted Feb 19 2011, 04:20

I have been reading here for a few months and finally needed to post (the search answers almost all my questions before i needed to post). When it comes to the different entities I am thinking that a C-corp might serve me best. I am aware that most people dont like the C-corp because of the double taxation.

In my situation, I think it would be better as I need to limit my income as much as possible. You see, I have a child support order against me for my 2yr old son. Now, before anyone thinks I am trying to get out of paying for him, and doing my duty, and I am dead beat dad, just wait. I am none of those. I am very involved in my sons life, I pay my support every month, never been late. I am actually ahead on it. I have no problem paying it, it is my responsibility, so I do as I must. However, his mother is leach on society and is getting every gov hand out she can get, and only wants more. As soon as she thinks I am making more money she files for an adjustment to the support order. Right now, I give her $500/mo.

In PA, the order is not based on a set percentage. But rather a sliding scale based on total income of both parents, and percentage of the total each parent puts in to the total, and how much of that amount should be spent on the child. In short terms, the more you make, progressively the more you pay. Its not a matter of the child needing anything, he has everything he could ever need. And i have never denied him anything he needed, and want to be in a financial position in the future to ensure that I have the ability to provide him with everything he will need.

That being said, I don't think an LLC or S-corp would be a wise decision for me as they flow through to my taxes as earnings. I don't want to rehab a few properties and have my taxes at the end of the year show 100k+ income when in fact I didn't take the money out of the company. Then when she files for adjustment, they base my payment on the income of the company leaving me with 1500/mo child support payments that I wouldnt be able to afford.

I am planning on doing a couple fix/flips, and some mobile homes, then once I build up some cash I want to buy and hold properties for passive/long term income. I figure with the C-corp, the company could hold the profits, and pay me a VERY modest part time salary while I work my current job (which maybe in jeopardy this summer as I work for a public funded transit agency). When/if I get laid off I will take a salary that will be just enough to pay my bills and do REI fulltime. (This is how it works in my head, but we'll see.) I am planning on funding the company with an initial 50k in cash.

I told you all that, to ask you this. Would a C-corp be a wise choice for me? or is there some other option I am missing?

Thanks in advance,

Dave

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