Fix & Flippers Using an S-Corp — Don’t Ignore This

[William Thompson]

If you’re running your fix-and-flip business through an S-Corporation, here’s something to keep on your radar.

The IRS is getting much better at spotting S-Corp compliance issues. A lot of it is automated now. Patterns get flagged quickly.

One area I see people mess up?

Distributions must follow ownership percentages.

If you have two owners — say 75% and 25% — then distributions made during the year need to follow that 75/25 split.

If they don’t, you can unintentionally create a second class of stock issue and potentially terminate your S-Corp election.

And trust me, you don’t want that. Fixing it after the fact is messy and expensive.

S-Corps are powerful for active income like flipping — but they come with rules. Small administrative mistakes can create big back-end headaches.

For those running flips through an S-Corp — do you actively monitor how distributions are handled, or is it something you only think about at year-end?