Do I even need to pay taxes?

Since my first real-estate deal has completed, I’ve been starting to think heavily about my S-corporation’s first IRS filing. Especially with 4th quarter coming up in October. However, I finally calmed down and thought things out a bit. I started to think that I may actually never take out this first initial sales income. I might just leave it in and use it for the business functioning. If I do pay myself any W-2 wages, I can just wait until after October, thus, giving me more time to get things figured out.
Now, I’m obviously going to have to pay the capital gains taxes on the flip I did. It was a same-day closing, unquestionably short-term capital gains. So the bigger question, does that have to be paid on the quarterly filing? Or can I just wait and report it on the yearly 1120S?


Property flipping generates ordinary income, not capital gain income. Your flip profits are ordinary income, not capital gains.

At the end of the year, whatever income your S-Corp has made will “flow through” to your 1040 and be taxed accordingly. Does not matter whether you actually withdrew any money from the business, it still gets taxed as income.

Your other questions are best addressed by your CPA.

whether you have to pay quarterly depends on many factors: income, income from the flip, other gains/losses, paycheck withholding, etc.

IRS doesn’t care where the money comes from as long as they get their cut. You could just as easily crank up your W-2 withholding and avoid having to make quarterly payments.

And your flip is indeed ordinary business income. ~45% total tax bite.

They tax your flip income at 45%? :shocked

A flip will be taxed on the short term capital gains tax rate…which is determined by whatever tax bracket you are in. Add in your state income tax and that’s why Mark estimates about 45%

Grrr… My edit function doesn’t seem to be working.
My apologies, but I made a mistake on that last post. The flip is looked at as ordinary income and therefore taxed at your normal income tax bracket rate. Plus you have self employment tax to worry about. Therefore 45% is an estimate for the total taxes.