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DRAFT — pending professional review

NOT LEGAL OR TAX ADVICE. This module is reference material for the HigherSelf Network cohort. Pending Lumina tone review, outside-CPA review, ERISA-counsel review for any Solo 401(k) or ROBS section, and Grace Fields authorization before external publication. Cohort-facing facts use anonymized framing until written consent is on file.

All strategies

entity structure strategy

S-corp election (Form 2553)

IRC § 1361–§ 1378

Eligibility

Best when
Net profit consistently > ~$50K and stable; owner can take Watson-reasonable W-2 wage and remainder as distribution.
Do not use when
Profit volatile or low; owner needs flexibility on how income is paid.
Deadline
Form 2553 filed by 3/15 of the tax year for which it applies, or within 75 days of LLC formation

Documentation

  • Form 2553
  • Payroll system + W-2
  • Reasonable-comp benchmarking (RCReports / BLS OES)

Risks & warnings

Anti-abuse anchor: Watson v. United States, 668 F.3d 1008 (8th Cir. 2012) — reasonable W-2 wage required.

Applies to

HigherSelf NetworkA.M. ConsultingThe 7 Space

Interacts with

Accountable Plan reimbursement§ 199A Qualified Business Income deduction
Research only — not legal or tax advice