Posted by JHyre in Ohio on December 18, 1998 at 06:21:16:
I hate to be the bearer of bad news, BUT Lonnie is right. You are 99.9% likely to be a dealer for IRS purposes. As such:
- You pay ordinary income tax rates, NOT capital gains rates
- You may not use installment sale method
- You may not deprecaite your mobile homes even if you end up holding one for over year (NOT likely in your case!)
Mr. Bronchick’s advice- to use a corporation to flip mobile homes- is on the mark. While you are eventually double-taxed, the present value of reinvesting after only 15% taxation is very high given your dealer status. In addition, the corporation avoids the bulk of the self-employment/FICA tax. I ran a few spreadsheets to confirm this advice and was unable to find a better way.
Ohio has some VERY monopolistic motor vehicle dealer laws. Call me if you’d like to discuss them.
Regards & Way To Go!