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Earnings, Investments, Unearned Income, etc.

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mjp2

Junior Member
What is the name of your state? ILLINOIS

Here's scenario: (sorry about erratic nature of this post but trying to give as much detail as possible)

1. Husband- makes 50k on W2 in '05
Wife- makes 110k on W2 in '05
In addition, together they've begun to develop empty lots into houses via hiring a general contractor. They have made extra $50k last year on one property. That extra money, how are they supposed file? As unearned income? File schedule C , D? Their accounting person tells them to file schedule C (I believe) because that's too much money to fall into "investments" category.

2. Also, they have bought extra 3 lots last year and additional one this year.
Should they become a corporation this year and put all the properties into corp. structure? (That's what an accountant suggests). They do not intend to become full time developers.

3. Also, they have another developed property as of right now under contract. However, they want to postpone closing until a day after 365 days to fall into 15% capital gain. Does it even matter? Idea is to not to fall into high bracket...

Please respond; thank you in advance.
 



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