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ErikOk

For those with an LLC

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I have a call in to my accountant, but I would like to find out what others on the forum are doing about getting an EIN for your LLC. I was told by my accountant to get an EIN in order to obtain a checking account in the name of the LLC and also avoid commingling my personal & LLC funds.

 

In the IRS form it asks, "Indicate principal line of merchandise sold, specific construction work done, products produced, or services provided." And, on another line it asks:

 

Check one box that best describes the principal activity of your business.

 

Construction

Real estate

Rental & leasing

Manufacturing

Transportation & warehousing

Finance & insurance

Health care & social assistance

Accommodation & food service

Other (specify)

Wholesale-agent/broker

Wholesale-other

Retail

 

Reason I ask, is because I have read some information that says the IRS could brand you as a dealer and from that point there may be some tax consequences.

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I can't remember for sure, since I've had my LLC and EIN for several years, but I think I probably marked "Real Estate".

 

Lynn (FL)

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Just put real estate...BTW..getting your EIN should have been the VERY NEXT THING TO DO after you got your LLC.

Like...the same day...everything is online now, so you just do it.

I'm going to put together a new LLC for a different business, and I'm going to put it all together in a "business diary" so people can watch what I do, whether I fail or not.

I think it will help people starting a business to see a diary.

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Just put real estate...BTW..getting your EIN should have been the VERY NEXT THING TO DO after you got your LLC.

Like...the same day...everything is online now, so you just do it.

I'm going to put together a new LLC for a different business, and I'm going to put it all together in a "business diary" so people can watch what I do, whether I fail or not.

I think it will help people starting a business to see a diary.

 

Oh no, insights into the mind of John Jackson. This should be interesting :closedeyes:

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There isnt a single case out there

where a real estate company has

been branded a dealer...

 

Its most often the accountant labeling

you as a dealer instead of revamping

your entities and structure due to lack

of knowledge... on how to dance around

it...

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There isnt a single case out there

where a real estate company has

been branded a dealer...

 

That must be before the audit David, because I know of several instances where the IRS has used

an individual's or company's actions to brand them a dealer...[

 

Its most often the accountant labeling

you as a dealer instead of revamping

your entities and structure due to lack

of knowledge... on how to dance around

it...

 

No, it's most often your activities and how you conduct them that label you

a dealer...

 

Dealers buy and sell properties, hopefully for a profit. They do so as quickly as possible.

The key factor though is what they’re not — they’re not investors.

 

You see, investors are long term while dealers are more the get in, get out ASAP variety.

By the very nature of their activities, wholesalers, rehabbers, and yes, those of us who

do CAs are dealers whether we like it or not.

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Technically you are probably correct, Bill. But realistically, I think it would take a hell of a lot of wheeling and dealing volume to attract the attention of the IRS.

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Technically you are probably correct, Bill. But realistically, I think it would take a hell of a lot of wheeling and dealing volume to attract the attention of the IRS.

 

It's not really a matter of attracting the attention of the IRS. It's more of a matter of how you report your income for tax purposes. Investors who sell their property pay capital gains taxes on their income. Wholesalers report their assignment fees as ordinary income. Rehabbers treat their property as inventory and report their profits as ordinary income. And a non-refundable option fee that we receive in a cooperative assignment is ordinary income. My point is that "dealer" is not a classification that is determined by the IRS. It's determined by your real estate activity.

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