C-Corp Tax Deductions

9 Replies

I will soon be flipping homes in a newly created C-Corp.  My plan is to pay myself a salary and reduce the Corp's yearly net income to zero.  I would like the corporation to pay as many of my personal expenses as possible prior to paying a salary (to also reduce my personal income tax).  What expenses do C-Corps regularly and legally deduct? (company car, gas etc)   

An S corp usually makes more sense.  No double taxation on "profits".  Profit, above and beyond a "reasonable" salary, isn't subject to employment taxes. "Personal expenses" deducted still have to show a business purpose/use. @Steven Hamilton II  

@Jeff W.  

Are you working with a reputable firm to establish the Rollover As Business Startup structure?  They should be able to assist you with this type of question if so - at the very least by recommending a good CPA in your area.  If they cannot, you chose the wrong firm to work with, I'm sorry to say.

The concept is that the operating business must be established as a C corp.  The reason is that only a C Corp has specifically valued shares.  The C Corp establishes a 401(k) - or preferably in most cases a Profit Sharing Plan.  You can rollover existing tax-deferred retirement savings into that new plan.  The plan then does an Employee Stock Option Purchase of the parent company shares, which is accompanied by an independent 3rd party valuation of the company stock.

Once funded in this manner, you can operate the C Corp to flip houses and that retirement capital is simply treated as any other shareholder capital of the corporation.

The best way to reduce your taxable income is with new deferrals into the profit sharing plan.

The business can have legitimate operating expenses as well, and working with your CPA, you can determine what specifically is appropriate in your business structure.

@Jeff W.  

Excellent.  Ultimately, the answers will be pretty specific to your particular situation and business activities.  The trick is finding that CPA who is aggressive, but not over the line.  Take your time selecting a tax advisor for your business.

Best of luck with your new venture!

@Brandon Hall I am going to be flipping houses soon as well. I am going to be using a benefactors heloc for acquisition, holding, and selling costs. The benefactor will fund the purchases and then deed my LLC the property to hold until the sale. Does this make sense to do or should I use an S corp?

Rich Hupper, Real Estate Agent in MA (#9550548)
(978) 364-0240
Originally posted by @Rich Hupper :

@Brandon Hall I am going to be flipping houses soon as well. I am going to be using a benefactors heloc for acquisition, holding, and selling costs. The benefactor will fund the purchases and then deed my LLC the property to hold until the sale. Does this make sense to do or should I use an S corp?

 That is strongly going to depend upon your individual situation. We can't tell you directly here on a forum that there is a one size fits all solution because there truly is not.

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