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Self-employed and means test

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    Self-employed and means test

    If a debtor has a 50% share in an S Corp and does't get pay with a W-2 but only received a K-1 at the end of the year and file Sch. E on IRS 1040, is this still considered as self-employed eventhough it is a Corporation?

    Or does self-employed refer to only as when you have a business and you do the business under your name or file a DBA and thus you need to file Sch C on your IRS form 1040?

    Please help!

    #2
    You are self employed. But it does not really matter, except how it affects your schedules and deductions.

    I am also self employed, with a S Corp. When we filed CH 7, our attorney told us: All that matters is money in minus money out. We treated the total expenses and income as though there was no S Corp in the middle.

    One exception was some of the subcontractors we employ. Their pay, mandated by long term contracts, was not included anywhere that I can recall.

    It seems complicated at first, with a Corp, and can be. The S Corp is an asset of yours and will have to be assigned a value and exempted. Our value was Zero dollars, since we have a service business that is entirely reliant on our talent and has no inventory or stocks of supplies or business location. If those are factors for you, it can get more complicated.

    In fact, I would really recommend you only file with an attorney if a corporation is an asset. And doubly so if you wish to keep the business in operation after BK.
    11-20-09-- Filed Chapter 7
    12-23-09-- 341 Meeting-Early Christmas Gift?
    3-9-10--Discharged

    Comment


      #3
      IRS Forms and Schedules are "illustrative" but not "controlling" for BKC purposes. You can choose to schedule the K-1 income as either wages or as business income. This is a strategic choice to make in bankruptcy, and is not controlled by tax law concerns.

      However, as the previous poster stated, any non-exempt value of your business will subject to turnover to the Trustee. Assuming you do not want to turn your corporation over, along with any/all corporate assets, you really ought to consult an attorney to prepare your case.

      Comment

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