06-16-2015, 11:49 PM
(This post was last modified: 06-16-2015, 11:56 PM by Dividend Watcher.)
In my opinion, I would march right over to an Enrolled Agent or CPA's office and discuss this.
S-Corps are treated as non-taxable corporations with all profits/losses a passed through to the shareholder(s). So you have to pay yourself a salary and excess profits can be distributed as shareholder distributions on a K-1. If the IRS doesn't agree that the salary you pay yourself is reasonable for the work you do, then they can reclassify distributions as income subject to FICA & unemployement taxes in addition to the usual stuff.
I don't know what the status would be of sheltering your personal stock investments in an S-Corp. but I assume it would be the same as if you held them in a personal taxable account. If the main line of business of the S-Corp is investments, then I think you would fall under much more onerous regulation and reporting requirements to the SEC.
I can see the benefits of an S-Corp (or LLC) for the freelance production business just as a liability shield but to act as a tax dodge you're creeping into shaky ground. Pay for good professional advice.
P.S. Neither H&R Block nor Jackson-Hewitt is a good place to start searching for help on this.
P.S.S. Welcome to the forum! I was gonna invite you to introduce yourself in the Introductions section but I guess people could wander over to your blog and check out the advertising while they're at it.
S-Corps are treated as non-taxable corporations with all profits/losses a passed through to the shareholder(s). So you have to pay yourself a salary and excess profits can be distributed as shareholder distributions on a K-1. If the IRS doesn't agree that the salary you pay yourself is reasonable for the work you do, then they can reclassify distributions as income subject to FICA & unemployement taxes in addition to the usual stuff.
I don't know what the status would be of sheltering your personal stock investments in an S-Corp. but I assume it would be the same as if you held them in a personal taxable account. If the main line of business of the S-Corp is investments, then I think you would fall under much more onerous regulation and reporting requirements to the SEC.
I can see the benefits of an S-Corp (or LLC) for the freelance production business just as a liability shield but to act as a tax dodge you're creeping into shaky ground. Pay for good professional advice.
P.S. Neither H&R Block nor Jackson-Hewitt is a good place to start searching for help on this.
P.S.S. Welcome to the forum! I was gonna invite you to introduce yourself in the Introductions section but I guess people could wander over to your blog and check out the advertising while they're at it.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan