flipping out over possible s-corp loss
Here's my simplified as possible scenario:
in 2011, I set up LLC, bought and sold flip title in LLC, LLC made 25k profit on sale of flip. Took 25k out of LLC account and put in my personal account. Towards end of 2011, LLC bought another flip for 75k. (Note: LLC is single member with s-corp status)
Soooo - yes, I know mistake #1 was that I took 25k profit out. Was supposed to pay myself a taxed salary, and take rest as k-1 dividend. Didn't know, so I guess penalties will ensue for that.
BUT - being that the LLC had a 25k profit in about September, but then in about December had a 75k expense, doesn't that leave a 50k LOSS on the 1120s form and make the penalties and missing salary issue moot?
Have I got this right? thanks!
Most Popular Reply
Everything above is spot on...and I just want to reiterate what Aaron said -- if this stuff doesn't make perfect sense to you, definitely find a good CPA/accountant (who is versed in real estate investing) to do your taxes.
In fact, even if this stuff *does* make sense to you, find a good accountant -- he'll save you more money than he costs you...