quick question.
Say you have an agent, and that agent brought in $100,000 in commission in 2006. You kept $10,000 of that commission. Do you owe taxes on the $100,000 or the $10,000?

On one hand, I dont see why a corporation would have to pay taxes on a commission check that 90% of their agents keep, on the other hand you would think a corporation would have to pay taxes on everything their company brings in.

Any thoughts on this?

Neither.

The $100,000 is a revenue

$90,000 to the agent is an expense.

You have other expenses too that might relate to the sale (i.e. variable expenses that you have for compliance, processing etc.)

Businesses pay taxes on profit.

$100000 Revenue
($90000) Commission expense

$10000 Profit

If you had a business that had inventory, you would pay taxes on revenue minus cost of goods sold.

Of course this is a broad example. We are not considering other forms of revenues and expenditures, as well as the company's structure.

Mike,
You need to find an accountant fast. Did you seek tax advice before choosing your corporate structure? If not you need to find an experienced Real Estate Account quickly before you make errors that could cost you alot of money!

thanks Paul, I have the best CPA in the state and he almost definately knows the answer to this question, just was thinking about it late at night and decided to post it

taxes are for chumps. I haven't paid them in about a decade.

Graysqwrl.. be careful what your saying about not paying taxes

Maybe I should rephrase....The only taxes I pay are the ones I can't figure out how to evade.

better?

Ok... its official.... graysqwrl is officially on the "If you take his advice your failing one of lifes little intelligence tests" list.

There are intelligent and legal ways to substantially minimize your tax burden. Going any further puts you at the mercy of an IRS court where our legal system does a 180 and the burden of proof is on the accused to prove their innocence rather than on the IRS to prove your guilt.

Good luck with that.

R

If you would answere the question than you would be okay. All the extra's about your personally taxes was not necessary.

Not necessary, but funny!

Besides, people already told him what to do.

How is this an issue "Where agents get to keep 100% of their commission"?

correct me if I'm wrong, but even if you pay your agents directly from escrow, the IRS gods still view it as the brokerage's revenue. It's just taken immediately as the brokerage expense....assuming 1099'd agents

VM's profit and therefore taxed portion would be the "per file fee" or however he makes his buck.

The IRS doesnt require me to 1099 commission checks that escrow cuts directly to the agent. I called on that. The problem is the rebate checks from the lender often require it to be made out to the company rather than the individual. So what I do is have the check made out to the company, have the agent deposit it in my bank account and I use my online business bill pay to get the checks to my agent as soon as possible

There is a solution:


www.fairtax.org

Call your Congressional Representatives and Senators and tell them to get on board!

"The problem is the rebate checks from the lender often require it to be made out to the company rather than the individual. So what I do is have the check made out to the company, have the agent deposit it in my bank account and I use my online business bill pay to get the checks to my agent as soon as possible"

I hope you mean commission checks and not rebate checks.... unless the $$ is going to the consumer.

yes, that is what i meant. The lenders refer to it as rebates, meaning rebate to the agent (ie. commission)