by Blackwell M. Brogden, Jr., Deputy Legal Counsel
Many real estate licensees, for tax and liability reasons, choose to incorporate their brokerage firms. Some brokerage firms elect tax treatment as Subchapter S corporations.
The Commission has also observed that a number of "individual" brokers (and some salesmen) associated with brokerage firms have, for tax purposes, formed their own corporations to receive their brokerage fees and commissions and also elected Subchapter S tax treatment.
All corporations, without regard to their tax status, must obtain real estate licenses from the Real Estate Commission.
This presents two special problems for salesmen: First of all, since every licensed corporation must have a principal broker who is an executive officer of the corporation, the salesman must retain a licensed broker who is willing to assume the responsibility of a corporate officer.
Secondly, since a salesman may receive compensation only from his or her broker-in-charge, the broker-in-charge of the salesman's corporation must also be the broker-in-charge of the office with which the salesman is associated.
The Commission reminds licensees that, for purposes of the Real Estate License Law, Subchapter S corporations are treated the same as other corporations and therefore must obtain their own, separate real estate license.