On Jun 2, 3:24*pm, Stuart Bronstein <spamt...[at]lexregia.com> wrote:
- quote -



However, if you have an LLC that has elected to be taxed as a
corporation and made an S election, in order to go back to sole
proprietor (disregarded entity) you must liquidate the corporation and
distribute its assets -- a taxable event. See Reg. Sec. 301.7701-3(g)
(1)(iii).

If the S corporation holds any appreciated assets (including
inventory), gain will be recognized as if the corporation had sold
those assets at FMV, and that gain will flow through to the
stockholder.

Katie in San Diego

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"removeps-groups[at]yahoo.com" <removeps-groups[at]yahoo.com> wrote:
- quote -

To avoid excess self-employement/social security tax? You can do that
with an S-corp, too, and pay less tax than a proprietorship.

- quote -

If it's an S-corporation, pretty much but not exactly. If it's an LLC,
the answer is yes, you can chose to be taxed as a proprietorship, C-
corporation or S-corporation.

Stu

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On Jun 2, 12:07*pm, "removeps-gro...[at]yahoo.com" <removeps-
gro...[at]yahoo.com> wrote:
- quote -

You liquidate the corporation which is at least one taxable event,
perhaps more.

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On Jun 1, 2:27 pm, "Phil Marti" <prm20...[at]verizon.net> wrote:

- quote -

Is is possible for the corporation to be taxed as a sole
proprietorship? This gives you the liability protections of a
corporation, but the tax benefits of a sole proprietorship (including
not paying too much social security tax, and also 0.9235% of income is
subject to SE tax as opposed to 100%). If you previously elected S
corp status, how do you elect sole proprietorship status?

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<removeps-groups[at]yahoo.com> wrote:

- quote -

<snip
- quote -

Scrap the S-Corp and operate as a proprietorship or LLC.

--
Phil Marti
Clarksburg, MD

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In article <4840cb0c$0$30478$4c368faf[at]roadrunner.com> ,
rlsusenet[at]NOSPAMPUHLEEZschnapp.org <NoSuchPerson[at]bigfoot.com> wrote:
- quote -


Right. Just look at the back of a schedule SE.
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

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D. Stussy wrote:

- quote -

This doesn't apply to a self-employment tax, though. If you're
self-employed and a non-corporate entity, any social security taxes
you've paid through an employer applies to your limits when calculating
the self-employment taxes.

Right?

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"Mark Bole" <makbo[at]pacbell.net> wrote in message
news400k.1345$89.246[at]nlpi069.nbdc.sbc.com...
- quote -

Correct. Both employers must pay up to the maximum, and tender a like
amount for the employee's share. Only the employee, by filing a 1040, can
get a refund of any excess due to having multiple employers. There is no
corresponding credit for the employer's shares.

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removeps-groups[at]yahoo.com wrote:
[...]
- quote -

If I correctly understand the gist of your message, you want to know if
an employer can avoid (or get a credit) for excess of their share of Soc
Sec payroll tax paid on wages exceeding an employee's annual limit
($102K this year) due to two or more employers, especially if one of the
employers is actually another form of the employee (S-corp).

(Just as a thought exercise, how would you allocate such an employer
credit, anyway? Require the two employers to file information returns
with each other? Hardly, I think...)

A quick search of group archives confirms my hunch, namely: no, you
can't. The law only provides a credit for the employee in this situation.

There is also a passing reference to something called a "common
paymaster", sounds like affiliated companies can circumvent this problem
under some very specific and uncommon circumstances.

-Mark Bole

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Let's say you have one job that during the year pays 204k. The social
security cap is 102k, so by the end of June your net salary paid from
the start of the year is 102k, and from July to December you pay no
social security tax, and neither does your employer. Is this right?
So the net social security tax paid for the year is 12648, which is
reasonable.

Now let's say you have two jobs that each pay 102k a year. By the end
of June is job has paid you 51k, which is below the 102k limit, so
they continue to withhold social security till December. As a result,
the taxpayer wlil have paid 12648 (6324 from each company) by the end
of the year and they can get a refund of 6324 for excess social
security tax paid. However, each company pays 6324. So the net
social security tax paid by the end of the year is 6324 (employee's
portion after claiming excess social security) + 6324 + 6324 -= 18972.

My reason for asking is that if the second company is your own S Corp
from which you draw a W2 salary, then you could end up paying more
social security tax.

By contrast, if your company was a sole proprietorship, then all your
earnings would be on Schedule C. Then Schedule SE will compute the
social security tax as zero as follows:

Line 6: Net earnings from self employment = 102000*0.9235
Line 7: Maximum amount subject to SS = 102000

Line 8a for 2008 will read

Total social security wages and tips (total of boxes 3 and 7 on
Form(s) W-2) and railroad retirement (tier 1) compensation. If
$102,000 or more, skip lines 8b through 10, and go to line 11

So Line 10, social security tax is zero. And if your W2 income from
the first job was less than 102k, say 100k, then only 2k of your self-
employment income would be subject to social security tax.

Line 11: Medicare = Line6*0.029 = 2731.71

So what's the solution to avoid paying too much social security tax?

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