Hey everyone, for those in real estate brokerage with an S Corp or tax folks with clients in real estate, what’s a reasonable salary to set? I’m looking at an S Corp setup and should be around mid 6 figures next year. Any advice?
If you’re hitting mid 6 figures, definitely worth talking to a CPA or EA.
When setting a salary, think about what you’d pay someone to do what you’re doing. The IRS does give guidelines, but generally, it’s about finding a comparable salary.
Tegan said:
When setting a salary, think about what you’d pay someone to do what you’re doing. The IRS does give guidelines, but generally, it’s about finding a comparable salary.
With RE agents, 100% of net income often makes the most sense as salary.
Almost all agents work as independent contractors, so it’s hard to argue a salary that’s lower than typical agent earnings.
Almost all agents work as independent contractors, so it’s hard to argue a salary that’s lower than typical agent earnings.
On what grounds? There’s hardly any clear-cut rule on this. Case law shows it’s all over the map, and often comp ranges from 25-60%. Audits are also situational. No blanket rule here applies.
Almost all agents work as independent contractors, so it’s hard to argue a salary that’s lower than typical agent earnings.
That reasoning could apply to most single-member S Corps, but IRS guidance says that’s not always true.
Lyle said:
@Zen
True, because not all S Corps make their revenue solely from the shareholders’ work.
But many do! Take electricians, plumbers, lawyers, etc. The IRS hasn’t enforced 100% as salary in similar cases.
Almost all agents work as independent contractors, so it’s hard to argue a salary that’s lower than typical agent earnings.
Feels like he’s trying to pull one over on self-employed folks.
Lyle said:
@Ember
Me? Nope, if anything I’d suggest less paperwork, not more!
Nope, meant someone else. Always good to see balanced advice here.
Lyle said:
@Ember
Me? Nope, if anything I’d suggest less paperwork, not more!
Nope, meant someone else. Always good to see balanced advice here.
Didn’t you praise my advice earlier? Now you’re questioning it? Circular 230 lets us give tax advice legally, and a lot of EAs, CPAs, and tax attorneys provide similar services. Maybe do some research on it?
@Noor
> Circular 230 lets us give opinions within reason.
Just curious, which credential do you hold?
Edit:
> You praised me earlier for my advice
Seemed more like faint praise to me.
Ansel said:
@Noor
> Circular 230 lets us give opinions within reason.
Just curious, which credential do you hold?
Edit:
> You praised me earlier for my advice
Seemed more like faint praise to me.
I already stated it. Why the grilling? Is this common here?
Tegan said:
@Lyle
In certain situations, it might be more flexible.
RE agents I know don’t operate in that kind of setup.