25 yr old newbie w/tax questions - Posted by craig

Posted by E.Eka on October 24, 2003 at 09:47:33:

You always report your income to the IRS. Even if it’s excludable, you still must report it.

25 yr old newbie w/tax questions - Posted by craig

Posted by craig on October 23, 2003 at 16:31:51:

I am new at this, just starting out. I intend to buy low and sell high (who doesn’t?) rather quickly. No L/Os or rentals. If I do a few transactions a year, do I have to report my profits to the IRS? Ive heard a lot about different S or C corporations and things like that. Should I consider forming a business like that, and do i need business cards? It seems complicated, am i overthinking everything (maybe I should just jump in to REI) I would just be doing this part-time. Any advice would be greatly appreciated.

Re: 25 yr old newbie w/tax questions - Posted by RichV(FL)

Posted by RichV(FL) on October 23, 2003 at 18:51:29:


The others are correct. Thats kind of the name of the game in REI.

Buy low, sell high, pay your taxes on the profits you make. Thats the way the system works.

Try some deals first, get your feet wet. Find your niche in REI. And if you think this is something you want to go further with then worry about setting up a corp.

Just some thoughts,


Re: 25 yr old newbie w/tax questions - Posted by Kristine-CA

Posted by Kristine-CA on October 23, 2003 at 17:59:04:

Craig: of course you have to report your profit to the IRS. You get to report your expenses, etc., too. My suggestion would be to buy low and sell high at least once to see if you like it and that you are sure this what you want to do. Then you can deal with all the ins and outs of LLCs and C corps, etc. This is just my opinion, but I think there is too much made of setting up a business instead of doing the business. Do a few deals and see how it goes. Paying taxes on ordinary income never killed anybody…or has it?

Sincerely, Kristine

Re: Simple - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on October 23, 2003 at 16:51:33:

If you make money, you owe taxes. The end.

Keep in mind that if you buy and sell quickly the IRS may call you a “dealer in real estate”. Then all your profits will be ordinary gain, and you will not be allowed to claim depriciation. Just all profits taxed as ordinary income, plain and simple. The dealer status is usually not claimed by IRS until you establish a pattern of that kind of activity, whatever that means.

Buy low, sell high, make a profit, and pay tax on the profit. That is how it works.

thanks guys - Posted by Craig

Posted by Craig on October 24, 2003 at 08:23:56:

I sincerely appreciate it!

Follow Up Question… - Posted by CL2

Posted by CL2 on October 24, 2003 at 09:13:41:

In addition to Craig’s comment, how does your income from Subject To deals or Assignments or flipping your deal to an investor affect your tax status? Do you report such income to the IRS???