Real Estate License and IRS Tax Purposes

What is the status of Joe for IRS federal income tax purposes?

Is Joe considered as an employer or an employee?

The Status of Joe for IRS Federal Income Tax Purposes

Joe will be considered as an employer for the IRS federal income tax.

When it comes to IRS federal income tax purposes, Joe is viewed as an employer. Even though he did not sign a written employment agreement with his brother Sam, who is an active broker and owns a brokerage firm, Joe's role as the one who put his valid real estate license with Sam makes him responsible for Sam's engagement in the firm. This responsibility classifies Joe as an employer in this context.

IRS regulations consider the individual who holds the real estate license and is accountable for the engagement of others in real estate activities to be the employer for income tax purposes. Therefore, in this scenario, Joe is deemed as the employer for IRS federal income tax considerations.