Income Taxes and Record Keeping ( tax ) Message Board

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Strategies & Market Trends : Income Taxes and Record Keeping ( tax )

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To: Pierre who wrote (457)	1/15/1998 7:58:00 AM
From: Colin Cody	Read Replies (1) of 5810

Well if you ARE taking a salary then you MAY be able to have the corp retain the trading profits. . But is an S-Corp a ggod thing? The S-Corp would be taxed the same as you are individually. i.e. if you are an INVESTOR, you are taxed that way as the infomation is flowed-thru to your 1040 as such. . If your Corp reported it as a Trade or Business / TRADER that would also flow thru to the 1040 as such, reported nearly the same, except using Sch E rather than Sch C.. . If you were challenged on your TRADER status and the IRS won, you stand not only losing the tax benefits you originally received, but you possibly rich losing your S-Corp status retroactively (due to excessive passive activitires). That COULD mean that the income (of what might also be classified as a "Personal Service Company") is taxed at the C-Corp level. . You also might have STATE S-Corp / C-Corp issues to handle. . You might be thinking that "burried" in an S-Corp the Wall Street type expenses will be easier to get through - and of course you are correct in thinking that being within a corporate structure DOES give an operation an aire of legitamacy! . But you also are aware that the IRS wrote an ISSP on Attorney Firms and therefore could target your corp as a Law Practice - especially with the "odd trasactions" being reported (g) . So at first blush I'd not say the idea is not 100% good nor 100% bad. But my gut feeling at this point is that doing it from within an S-corp has more risks than I'd want to take. . If you've heard differently, maybe you can coinvince me the potentiial rewards are greater than the risks that I perceive. . Colin

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