[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]

Re: Tax status, sub S



PureBytes Links

Trading Reference Links

Nay nay.
Common misconception.
No double taxation if all corporate earnings after expenses and losses are
paid out as salary or other compensation to the trader-employee.  If no net
profits, no corp taxes; alternatively, corp tax rate on first $50K is, as I
recall, only 15% so, have at worst some more choices on how to handle
trading profits, how much cash to retain, etc.  Also, Corp pays half the SEP
pre-tax, employee pays other half so no double there either.
If the trading is wildly successful, and management is dimwitted and/or
poorly advised, so much so that dividends are paid out, yes, there will be
double taxation.  Likely? I think not.
NHBob
----- Original Message -----
From: "Gary Fritz" <fritz@xxxxxxxx>
To: <omega-list@xxxxxxxxxx>
Sent: Tuesday, July 24, 2001 11:25 AM
Subject: Re: Tax status, sub S


> > No, not Sub S; C corporation is the only way to go"formalizes" the
> > business entity (as opposed to a pass-thru which has all the IRS
> > code limitations of trading as an individual) so that "trader
> > status" is no longer an issue.
>
> However with a C corp you are in danger of double taxation.  C corps
> must pay taxes on their income, then they can pass on income to you,
> and you pay taxes on it again.  S corps pay no taxes and just pass
> the income through to your personal return.
>
> Gary
>
>