Boarstone 0 Report post Posted April 10, 2004 Hello Dave , I am putting together an option on 11 lots of raw land from a large landowner . The price to me is$550,000. My option is for one year with an extension to another year if I am able to move 3 or 4 of the lots. Market price is $750,000. Is there a way to avoid dealer status, and if not are you a dealer from then on or is it project specific. Is it better to purposely spread the sales over a couple of years or sell them all asap ? This is the type of deal where they could all sell fairly quickly. Are there any ways to structure this deal to reduce the tax liability ? Should I do an LLC or some other entity . I am fairly new and will be sending a large check (for me) to the uncle this week from 3 deals last year so am trying to be a little smarter this time around. Thanks very much Share this post Link to post Share on other sites
Dave T 0 Report post Posted April 13, 2004 Each lot sold is a dealer disposition, regardless of your holding period. Your decision to use a business entity does not change the tax treatment. A business entity does not necessarily reduce your tax liability, only your liability exposure in the event of a lawsuit. That said, you probably already know that the first $50K in net income in a C-Corp is taxed at 15%, while the same income in an S-Corp is taxed at your ordinary income tax rate and is also subject to self-employment income taxes. Consult with your CPA and your tax advisor to choose a business entity that gives you the most favorable tax treatment while still giving you the flexibility you need to operate your business. Share this post Link to post Share on other sites
