Real Estate Transactions: Smooth Running

Real Estate Transactions Author’s Name: Institution: Date: Real Estate Transactions Comparing two corporate structures in financing real estate transactions and their respective consequences (liability and tax consequences); Province of Ontario, Canada Real estate transactions are administered by common law, centralized statutes, and state statutes to ensure smooth running. However, real estate requirements differ from one state to the other, depending on the law of the nation. These transactions involve brokers who are employed as the agents of the seller to market their products and look for buyers. Brokers always enter into a listing agreement with their sellers before getting into the business. Moreover, the agreement may be open or exclusive whereby the open agreement the broker earns a commission with the condition finding a buyer while in the exclusive agreement the broker is termed as the only agent who is entitled to a commission for getting a buyer. The corporate structure is defined as the administration and ownership of any business. They are different corporate structures in real estate such as C Corporation which has the biggest range of expenses and deductions and is seen when the employees of the company have fringe benefits CITATION Can16 \l 1033 (GoC, 2016). For instance, if you own a C Corporation one can decide to come up with a medical repayment plus other workers benefits and deduct all the incurred costs associated with the running of these programs from the corporate taxes. However, C Corporation can enable the runners of the business to set up the fringe benefits without being taxed, which can lead to double taxation, thus incurring more cost to the company CITATION Gar18 \l 1033 (Sutton, 2018). The company is likely to experience the double taxation issue at the end of the financial year when they would decide to share the profit within the shareholders. On the other hand, we have S Corporation where they are no taxes incurred at the corporate level. In this form of structure, the shareholders pay the taxes at individual levels, which can be beneficial or unbeneficial, especially to the shareholders who generate more income because they pay very high taxes CITATION Jam14 \l 1033 (Rosado, 2014). However, S Corporation can scrape off the cost of their benefits, but for the shareholders who control more than two percent of the entity, assets should remain to pay taxes on all the benefits they receive CITATION Wol17 \l 1033 (Kluwer, 2017). S Corporations are used to avoid having personal service corporations tax rates, which are set by the IRS CITATION Dav16 \l 1033 (Manifould, 2016). IRS considers a company to be a personal service corporation if more than twenty percent of its compensation cost for the personal service activities performed in the firm is done by the owner-employees and the owner-employees owns ten percent or more of the organization stock. Personal activities may include actuarial science, accounting, consulting, and engineering. Additionally, since S Corporation stakeholders always pay taxes on the personal level, it is good to consider paying them reasonable salaries, which lower the rate of taxation CITATION Mar19 \l 1033 (Little, 2019). C Corporations they allow an unlimited num...