Do I have to be taxed as an SCorp?
Hi All,
My CPA is advising that I have my LLC be taxed as an SCorp because I'm an active participant in my fix and flips. To clarify, I have a multiple member LLC (me and my husband). In that LLC, I make some private money loans, do some fix and flip work and, in the near future, will have some rental income. In 2014 we'll likely have a 25/75 split between passive (interest income) and 'investment' (fix & flip income). In future years, that will likely become more a 50/50 split.
I disagree with my accountant and think that I should be able to pass all that income through on a K1 (or schedule C) and NOT have to pay myself a "market salary" and then take dividends in an S Corp.
Can any expert out there chime in on whether this S Corp election is likely to be required?
Thank you!
Danielle