All Forum Posts by: Arthur C.

@Melissa Dinas

Are you using a LLC for this flip? If so, have you elected for your LLC to be taxed as a S Corp? You may create some savings that way as you won't pay self employment taxes on all the profit you generate. Just thought I'd share. Good luck with this flip.

@Michael Plaks @Ashish Acharya

Sorry, I didn't have the chance to reply your comments back. Just wanted to say I greatly appreciate your inputs and it appeared that my closing is going to be completed in 2019, which seems to be more favorable for me in terms of my tax benefits. Wish you both Happy New Year and hope 2019 will be a great year for all of us!

@Michael Plaks

Thanks for commenting and the offer of your perspective.

I am glad to know that I can request a S Corp status effective in July 2018 when I file my 2018 tax return for the company. 

As I mentioned in my reply to Brandon Hall's comment above, I bought my flip under my LLC name and intend to sell it under my LLC name as well. So, I guess that is a good thing I won't have to deal with any issues related with what you mentioned.

Like I replied to Brandon's comment, how exactly should I pay myself salary this week if the closing occurs this week? Just write a business check payable to myself or initiate an ACH to myself? What about the consideration of FICA & Fed/State income withholding tax? Self-employment taxes? Should I deduct them from the gross first before figuring what my net pay is? I was wondering if it makes sense to subscribe a payroll system like ADP to take care all of the calculations of deductions from my gross salary? Any additional insights you may offer would be greatly helpful!

Thanks,

AC

@Ashish Acharya

Thank you for commenting.

How am I supposed to pay myself a salary this year in 2018 if I have not yet closed the property until 2019 if I decide to delay the closing? I do not have any cash inflows so I cannot pay myself a salary in 2018. Does this make sense? All the transactions have been cash outflows and they are all expenses related to my flip project. 

I'm still struggling to understand re: the estimated quarterly payments that I may be required to file. Does this only apply if I receive sales proceeds from my flip? If that's the case, then should I not worry about it on January 15 of the following year because I have not received the sales proceeds between Sept 1 to Dec 31. Most likely, I will worry about it for the period from Jan 1 thru March 31 and will need to file by April 25 for that period. Is this correct?

@Brandon Hall

Much appreciated you willing to take your time to post your comment  on this post. 

I used my LLC name to purchase my flip project and I will use my LLC name to sell it as well.

Sorry for my ignorance (I tried researching online and I had no luck) but how exactly should the payroll be done to pay myself a reasonable salary? Just write a business check payable to myself and deposit it in my personal checking account? What about the deductions for FICA & Fed/State income withholding tax? Self-employment taxes? Should I deduct them from the gross salary I pay to myself on the check? If so, then how should I calculate the Fed/State income withholding tax?

My plan is to continue flipping and I expect to do 1-3 flips in 2019 separately from the first flip. With my full time job, I anticipate making no more than $84.2K income after considering the standard deduction/itemized deduction. 

I agree I will need to talk with my CPA about this but he is on holiday break so like you said I'm under my time crunch... 

@Lance Lvovsky

My apologies. I just reread my comment I made and I meant to say taxed the self employment portion only on the salary but not the distribution. Does it matter if the flip project started BEFORE the election to tax my LLC as a S Corp but close the property AFTER the election?

Secondly, how late can I elect to be taxed as S Corp? It is my understanding that I can elect as S Corp within 2 months and 15 days after the creation of LLC or by March 15 of the following year. It is possible to do election late but I'll be subject to sort of a late or penalty fee whatever it may be. So, if that's the case, I would want to try avoid that.

I'm just trying to figure if it makes sense to delay the closing to 2019 but my question I mentioned above re: the date of election after starting the flip project is whether or not it would prevent me from getting taxed as S Corp on profits from that certain project because the election would be made after the project started? Or does it all come down to what year the property closes and if my LLC is set to be taxed as S Corp for that year?

AC

@Michael Plaks just thought you would probably help answer this question. Much appreciated!

Hello BP Community,

I have an important tax related question that I need someone to help answer. I have created my LLC back in July 2018 and started my first flip in August 2018. I actually had 2 months and 15 days to elect my LLC to be taxed as a S Corp after I created my LLC. However, I unfortunately did not elect as a S Corp in a timely manner.

My first flip is subject for closing on the last week of December and I am starting to wonder if it makes sense to delay the closing till 2019 so that I can be eligible to elect my LLC as a S Corp between Jan 1 - March 15.

However, my big question is...

Can the profits from my first flip still get taxed as S Corp (only on the partial portion of profits I draw as my salary not the distribution I take) even if the project actually started before I elect my LLC as a S Corp but do the closing , say on Jan 2, 2019, which is after the date of my election to tax my LLC as a S Corp?

If you could tag a good CPA that could give an answer shortly, I would greatly appreciate it very much!

Wish you and your family Happy Holidays!

Warm regards,

AC