Question for accountants or ones with direct experience please!!
Hi,
So a partner and myself are entering into a partnership of flips. We have plans to create the LLC for the future projects but this first one we are just running through on of his businesses. We have an idea of how to structure it for tax purposes for payments and expense my only question is for cash payments.
Where I am from we can find some day laborers who are paid cash. For these payments, Probably $2,000 for entire project, how should we calculate these for tax purposes? Can we say they are cash payments to different day laborers less than 600? If one of us has to take the expense how could we calculate the tax on this? Like if we have to pay the taxes?
Our main thing is we want to taxes liability for cash payments to go against the deal and not come out of either of our profits. I have a construction company which we may run the renovation through and then the cash payments would run through that. Then I would want the extra tax expense to cover that so once again the money comes our pre-profit and not out of our profit.
Anyone who has experience with this feel free to chime in.