Hello, I have a new S-Corp in the real estate industry. I licensed a real estate investment course and have raised a sum of money selling the course and e-book, all of the money is in the company bank account. Here is my question. If I use the money to purchase an investment (rental) property, the property will become an asset of the company, the question is, do I still have to pay taxes on the business income from the real estate course if all of the revenue was used to purchase the investment property?

Thanks!

Yes;as you can see, S corps are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. As an owner/shareholder of the S corp, you need to report the flow-through of income and losses on your 1040. The income of the S corp is taxed to you.So, you must pay tax on the income of the S corp by including the income on your return.As the S corp shareholder, you provide services to the S corp, you must receive an adequate or reasonable amount of compensationyou’re your services. The S corp may deduct the compensation expense and must pay the employer share of employment taxes: 6.2% Social Security tax and 1.45% Medicare tax. You, as the shareholder-employee , are responsible for 4.2% Social Security tax (in 2011 and 2012) and 1.45% Medicare tax. -

The S corp provides a report to you called a Sch K-1 of 1120S that lists your share of income and losses.Your S corp revenue increases your shareholder basis and AAA balance.