SCorp Unequal Capital Contributions

[Ryan O.]

I have an LLC with a partner that is currently being taxed as a partnership. We are considering electing sub-chapter S status for 2013 to help save SE tax, we are in the business of flipping.

Currently we have an arrangement where one of us contributes the purchase price and half the rehab costs and the other contributes half the rehab costs for each project, we split profits 50/50. Also, any misc business expenses, marketing, ect get split 50/50.

Will this arrangement work if we elect sub-chapter S status i.e unequal capital contribution but profits split 50/50. My research so far tells me no, but I wanted the opinion of the tax pros on BP.