Hello,
I have been considering to fully transitioning to stock market trading as my source of income. I learned about the tax advantages of S corporations, and I'm wondering if it will be beneficial for me to conduct my market trades by forming a Delaware or Nevada S corporation.
My understating is that an S corporation would help by decreasing the FICA tax to 50% assuming I take 50% of the total trading profit as salary and the remaining 50% as distributions. For instance for a total of $100,000 profit in a year, my FICA tax would be 15.3% x $50,000 = $7,650. However, without an S corporation, my FICA tax would be 15.3% x $100,000 = $15,300. So there is a saving of $7,650. Thus, as long as the "other" costs associated with running an S corporation are less than $7,650, I should be saving money in the long-run.
Is my hypothetical analysis correct? Am I missing anything important? I'm still learning about S corporations, so any insights into my situation would be very highly appreciated! Thanks a lot!!!
