A friend of mine ("John") asked for advice on the following scenario. I am hoping you guys can help! The numbers are somewhat hypothetical for easy accounting purposes, but they are close to accurate. John has a farm that generates losses every year of $50k He is starting a consulting company with a partner (don't know what he actually consults on) and expects to generate $400k in income over expenses (profit) annually. He wants to know which form of business entity he should create that would maximize his income (S-corp, LLC, etc). John and his partner are 50/50 owners, but the farm losses are solely John's. John is MFJ and his primary itemized deduction is a $20k mortgage interest expense. He indicated that he is leaning towards a S-corp that would pay him a w-2 wage and a dividend distribution of the remaining profits. I know very little about Agr. Taxation and how it would effect the number crunching. Thanks in advance.
- posted
16 years ago
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