Good morning. Are there any accountants on nostr who could answer some questions about my c-corp earning btc and short term cap gains? And if it would be better for me to switch to an s-corp to avoid the flat 21%? #asknostr #taxstr ? lol
Discussion
It could definitely be beneficial to switch to an S-Corp to avoid the 21% corporate tax. Since an S-Corp is a pass-through entity, short-term capital gains will flow through to your personal return and be taxed at your ordinary income rate on your Form 1040. All things considered, this can still result in a lower overall tax burden.
With a C-Corp, profits are taxed at 21%, and if you pay yourself dividends, those are taxed again at your individual rate — resulting in double taxation. So the C-Corp setup can sometimes be less than ideal. It also depends on how many and what types of shareholders you want the corporation to have. S-Corps have limitations in that regard.
Okay, thank you for the specifics. My corp has hodl'ed since '21, but I am about to branch into selling supplements for bitcoin and need to decide on these things, beforehand preferably. I will check out your website and reach out. 🙏🚀🤝
Thanks! There are other tools you can take advantage of using the S-Corp such as paying yourself a W-2 wage (with payroll taxes being less than self-employment taxes) and contributing to retirement accounts all while lowering the business’ ordinary income that flows to you.
As you are aware, c corporations have the problem of double taxation. The corporation pays tax at federal rate of 21% and then you pay a tax rate of up to 37% on “dividends” that the owner with draws.
But it would seem logical that if you’re holding BTC and trading short term, the corporation is saving some tax. Then if you take a salary rather than a dividend, you will reduce your corporate income and the salary would be taxed at whatever rate you individual tax rate happens to be.
Obviously each tax scenario is different and depends on lots of factors. But given the right scenario, you may be better off than you think if gains are short term and held inside the c corp.
🤌 Thank you for the input. I just need to make sure I am crafting the right scenario. Please let me know if this something you are available and open to answer occasional questions on. Happy to tip or more formally pay. I have always prepared and submitted my own. It is a small biz and within my capabilities, so far. But a more knowledgable (on btc tax implications) person in my corner to bounce q's off of would be appreciated, as I move forward. Feels a bit like the wild west right now 😅
Sure, hit me up anytime. If you’re using the BTC as capital in your business and not trying to take it out, I think it’s probably a good scenario to stay C Corp. if the gains will be short term and your individual tax rate is higher than 21%.
If my nostr hive has any other book suggestions, then I am all ears 🐰 hehe
