Real Estate Sales Agent S-Corp - Spidell

Real Estate Sales Agent S-Corp

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Message Board Real Estate Sales Agent S-Corp

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    • #331591
      Anonymous
      Participant

      We seem to hear over an over about tax preparers recommending that California Real Estate Sales Agents incorporate, usually for the purpose of reducing Social Security/Medicare taxes.

      I am hesitant to recommend this because it  it my understanding that corporations can not be licensed as sales agents (only brokers can be).  This seems to create a potential assignment of income issue where the agent would be assigning their personal commissions to the corporation, something that the IRS may object to.

      Am I missing something on this issue?

    • #331737
      Mike Giangrande
      Participant

      Tax professionals often recommend S corporations as a way to save self-employment tax. I am not aware of a specific recommendation for Real Estate Agents. However, your concern about the agent being the one who is licensed is valid. This is a problem that a number of financial planners have run into as well.

      If assignment of income is an issue, then it’s very likely that your client should not run their real estate agent business as an S corporation.

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