Can someone help me With windfall profit tax?
Posted on February 18th, 2010 by admin
I am a licensed realestate agent in florida and i am about to close on a big commercial deal. I stand to make between 10 and 30 thousand dollars in comission. My husband says that if i am not incorporated the irs will take 57% of my commision for windfall profit tax. Is this true and what can i do to prevent it? Any info would be much appreciated as this is my first deal and i have made plans to reinvest this money in another property
hmmm
I am not sure about the IRS taking 57% of your profit…..
I am also not sure of your situation. It sounds like you maybe invested some money and in some property and then turned around and sold the property? If so any gain (selling price – purchase price + any expenses) would be taxed as a capital gain. If the property was kept over one year the rate would be 5-15% depending on your marginal tax bracket. If not kept over a year then it would be taxed at your tax bracket percentage.
But maybe this is just straight commision from selling the property? If this is the case then the commision is going to be gross income that will be reported on schedule c. It would be subject to 15.3% self employment tax as well as your regular tax rate. But you would be able to deduct any expenses that you incurred while selling (such as advertisement, realtor license expense, cell phone, etc)
hope this helps a bit
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