Another IRS/LLC/S/C question - Posted by Kate (MN)
Posted by Kate (MN) on February 07, 2002 at 17:14:17:
I’m new to this business and have stumbled into some opportunities more quickly than I thought, so I’m trying to get my legal life in order. My partner and I just purchased 6 single family homes. Three of those houses will be rental and three we will fix and sell. Originally I planned on setting up an LLC.
Soon we will be purchasing a 65 pad trailer court. I was going to set up a separate LLC for that. Most units are rental The plan is to rehab and sell the units. We planned on selling 10 per year, because MN law says a park owner can sell 10/year without getting a dealer’s license. Getting a MH dealer’s license is a long process here. (Alternative is to work with a realtor.) Anyway, word has spread that we are willing to sell the homes and we already have 25 tenants who want to buy whenever we are ready. (My partner has been managing the court - these are all tenants he’s comfortable with.)
Question 1: With all of this action, how is the IRS going to view us - we’re investing in the park, but selling the homes. And, combined with our other activities…Are we going to slip by as investors? Or, do we still want to?
Question 2: Should we be looking at setting up a C or S corp. or something else? Or stick with LLC? Or both?
I get varying opinions on this. Haven’t found a RE atty. yet. Thanks in advance for your advice.