Posted by Tony-VA on January 27, 2000 at 13:52:39:
First let me state that I am not a lawyer or an accountant but here is what I have gathered. Hopefully others will post as well.
For passive income (notes, rent etc.), you can hold them in a S-Corp. but not in a C-Corp. The IRS would view the C-corp. as a holding company if it had too much passive income.
As for avoiding dealer status, I don’t believe one entity will protect you better than another. If you are buying with the intent of selling, you are likely to be viewed as a dealer by the IRS regardless of the entity. Perhaps JHyre can confirm or deny this.
For holding notes, I would suggest that you look into an LLC. The LLC is know as the “lazy person’s corporation”. The formalities are less. If you are the sole member, or you and your spouse are the sole members, the IRS looks at this as a non-entity for tax purposes, thus you have less tax returns to do. Like an S-Corp., the income passes through to you.
Regardless of my input or others, please do your own independent research here. Make certain that you are confirming these answers.
Best wishes for your success,