Hi @Tracey Hamilton ,
1) Yes. It's self employment income, so it'll be based on two full years of business and personal tax returns.
2) Two year average of everything will be used. No, giving yourself a bigger paycheck/w2 will not matter. No, giving yourself a smaller paycheck/w2 will not matter either. Stability and continuity is the key.
3) Not for self employed persons, no.
Nevermind, I thought it all through more last night and answered my own question. Any wages coming from a pass-through entity would show the corresponding remaining profit on the 1040, so it would only increase payroll without simplifying anything. I do think if the businrss were converted to a c corp, it would simplify the mortgage application, but obviously greatly complicate the business. Sigh. Newly divorced sahm's have significant barriers to home ownership, even when there are assets and some income.
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