I am currently working for a real estate startup (LLC) that wholesales REOs nationwide. I was one of the earlier employees to get hired. Since my time of employment, the company has been expanding rapidly and the future looks pretty bright. Not too long ago, the topic of equity distribution/ alternative compensation methods has been discussed between the CEO and I. I have done some reading on the topic but still have a lot of unanswered questions. He had mentioned that given the nature of the business, a 1099 form would only apply here. As far as I'm aware, most of the company's assets are allocated into various LLC entities for managing investor portfolios and for it's own if that makes any difference. I take the recipient would have to setup a separate account as an individual contractor where the misc income or % of real estate sales proceeds can be received.
1) Specifically, would the 1099-MISC form be used in this case?
2) What are some general methods going about determining the appropriate % of distribution?
3) If this is the only logical method of compensation (receiving a % of real estate sales), how would it be taxed?
4) Are there any major advantages/disadvantages to acquiring and selling properties through the company as opposed to receiving a % of sales?
If additional details or clarification is required, please let me know.