Posted by Bill (OH) on March 22, 2000 at 08:47:09:
That’s almost word for word what my CPA said! (grin). The reason for an ‘S’ corp for ‘churn and burn’ deals is that you can divy up the income between salary and dividends. The down side is you have to set up that payroll system and keep up with it or you’ll find the IRS will assess you a penalty. Also, another reason is that with an ‘S’ corp you can’t lose more than you’ve put in. That’s a real problem with rehabbed rentals that you want to deduct costs on all the way past zero to carry over to the next year. So, LLC for those long term projects, and ‘S’ corp. for short term ones. Good Luck!