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Old 06-24-2019, 01:33 PM   #1
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LLC question...

Lookin' at an (IMHO) overpriced boat that has a transferable LLC. Does the owner add on to the price of the boat because of the LLC?
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Old 06-24-2019, 02:51 PM   #2
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Llc?
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Old 06-24-2019, 02:59 PM   #3
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An LLC is a limited liability company that makes it possible to transfer ownership in a boat simply by selling the LLC which owns the boat. In this case the boat is the only asset of the LLC. Then you don't have to pay any sales tax as long as the boat remains owned by the LLC.


I wouldn't pay a dime more for a boat owned by an LLC.


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Old 06-24-2019, 03:50 PM   #4
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I wouldn't pay a dime more for a boat owned by an LLC.
I would echo that opinion as well.

One can set up a LLC easily and for a few hundred dollars depending on the state.

If the owner and vessel are moved to a new state. And that new state has a registration process which includes displaying a decal/sticker on the exterior of the boat, likely the LLC strategy will be defeated and the sales tax may be collected at the time the vessel is registered.

If the vessel is not changing states for location, then the mailing address would need to be updated IF that state requires displaying a decal/sticker on the exterior of the boat. Some states will only mail for renewal. If you buy a boat and leave in the same state and the state mails to a previous address, the new owner will not be notified at renewal time.
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Old 06-24-2019, 04:13 PM   #5
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Lookin' at an (IMHO) overpriced boat that has a transferable LLC. Does the owner add on to the price of the boat because of the LLC?
Some do, knowing just how much money the're saving the buyer in sales/use taxes.
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Old 06-25-2019, 11:16 AM   #6
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Buying an LLC is not quite as simple as buying just the boat. If there are any claims against the LLC, which are not always easy to find, you'll inherit those too. I understand that state tax authorities can penetrate the LLC veil and will charge use/sales tax upon transfer if they conclude that the LLC simply exists to avoid tax.
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Old 06-25-2019, 01:28 PM   #7
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Sounds like a risky proposition for anyone livin' here in Kalifornia.
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Old 06-25-2019, 01:48 PM   #8
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LLCs

Quote:
Originally Posted by ancora View Post
Lookin' at an (IMHO) overpriced boat that has a transferable LLC. Does the owner add on to the price of the boat because of the LLC?
We own our boat in a Delaware LLC. The reasons for the LLC are as follows.

1. It was easier the purchase under our business.
2. There are Tax advantages with documentation in Del.
3. If you decide to sell the boat all you have to do is sell the LLC, and change the docs.
4. Part of the ownership cost can be charged off to the business.
5. The insurance on charters is better under our LLC.
6. IT DOES NOT CHANGE THE VALUE OF THE BOAT, but does make it easier to sell the boat.
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Old 06-26-2019, 02:17 AM   #9
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Originally Posted by Brisyboy View Post
Llc?
= a Pty.Ltd company in Australia.Here you would buy out the shareholder(s).

Be careful, the liabilities stay in the structure, as well as the assets. Some form of indemnity by the existing directors/shareholders for undisclosed liabilities might help.
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Old 06-26-2019, 10:46 AM   #10
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Originally Posted by gsholz View Post
Buying an LLC is not quite as simple as buying just the boat. If there are any claims against the LLC, which are not always easy to find, you'll inherit those too. I understand that state tax authorities can penetrate the LLC veil and will charge use/sales tax upon transfer if they conclude that the LLC simply exists to avoid tax.
Not in Florida. I actually called up the head of the tax department in Tallahassee and was told directly by him that it is a well known loophole and was totally legal. Florida use/sales tax is capped at $18k and that’s what we saved by buying the LLC. The previous owner had the boat and LLC for 9 years and signed an indemnity letter written by our attorney covering his time of ownership. We figured any liens from an owner prior to him would have shown up by then.

The boat is documented and is also registered in Florida as an antique (over 30 years old) for $4 a year. The LLC is in Delaware.
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Old 06-26-2019, 12:46 PM   #11
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If there are any claims against the LLC, which are not always easy to find, you'll inherit those too.
This is very true. In my grown-up job we deal with this regularly and buying an LLC means you are buying all the potential claims (even those that have not shown up yet). My lawyers get apoplectic when I talk about buying an LLC or other legal entity rather than just buying the underlying asset.
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Old 06-27-2019, 09:13 PM   #12
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You just have to renew an LLC every year. I have two LLC's in Florida. They run me $139 a year.
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Old 06-28-2019, 06:28 PM   #13
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Our boat was owned by a LLC when we bought it. After consulting with a maritime attorney, we bought just the boat and told them to keep their LLC.
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Old 06-28-2019, 07:03 PM   #14
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In short, LLC’s can help you take advantage of tax loop holes. LLC’s open up other issues such as past liabilities following the LLC. Those of us familiar with LLC’s know how to maneuver through these issues. Those not familiar with LLC’s might be best served avoiding them. Since every situation is different it’s impossible to make any meaningful comments on weather an LLC is a good situation or bad.
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Old 06-28-2019, 08:50 PM   #15
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If there are any claims against the LLC, which are not always easy to find, you'll inherit those too.
Absolutely correct. I would not consider buying a boat inside an LLC. Too much risk.

Iím a lawyer and I deal with LLCs every day.
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Old 07-01-2019, 01:11 PM   #16
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Lookin' at an (IMHO) overpriced boat that has a transferable LLC. Does the owner add on to the price of the boat because of the LLC?
An LLC (Limited Liability Corporation) is is used for a number of reasons, but primarily to allow transfer of the vessel and avoid payment of state and local taxes (sales/property etc.) when (and after) you purchase a boat. You do not actually transfer the LLC. You obtain membership in it by purchasing stock in it like you would by stock in any other corporation. You would normally obtain 100% of the shares in the LLC which holds the boat as an asset. Lets say the LLC is registered in Delaware. The seller transfers the shares of the LLC to you so you now become the controlling member (owner) of the Delaware LLC. As the boat was and remains part of the Delaware LLC, no taxable event takes place in your home state. There are, however, risks that an attorney can explain to you. It is not, nor should it be considered a "loop hole" as some here claim. It is a legitimate way to purchase a asset like an expensive boat There are many more issues to consider when purchasing a boat in this manner. and transferring membership in an LLC. I am an attorney for 32 years (in California) despite which I hired an attorney who specializes in these transactions. While there are tax implications/risks an LLC is a smart choice in the right circumstances. If you can afford an expensive boat, you can afford to spend the $3k to $5k that a proper transfer will cost you. If you want the name of the law firm (in San Diego) that can assist you (or refer you to an attorney in your area), let me know. My other bit of legal advise is not to seek legal advice from the internet. However well meaning the folks here are, most are not attorneys.
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Old 07-01-2019, 01:19 PM   #17
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Absolutely correct. I would not consider buying a boat inside an LLC. Too much risk.

Iím a lawyer and I deal with LLCs every day.
Drake, as an attorney myself who has dealt with many such transtfrs including the purchase of my boat ( a Nordhavn 55) through an LLC, how can you say there is too much risk? Would you tell that to any client wanting to transfer membership in an LLC? Literally tens of thousands of transactions like this (some involving and some not involving boats) occur annually. I am not saying that all boat purchases should be through an LLC, but after performing our due diligence it is a safe and effective transaction.
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Old 07-01-2019, 02:12 PM   #18
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My experience has been that banks will not make a loan on a boat owned by an LLC.
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Old 07-01-2019, 02:22 PM   #19
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Our boat was owned in a Delaware LLC. The primary reason was to limit personal liability. It cost us about $135/yr to maintain the corporation. I made sure that all the records were properly maintained and the finances were in a separate "business" account. I was told this would minimize any state trying to "pierce the veil of the LLC" to levy taxes. Several years ago a Hampton county in Virginia tried to assess property tax on the boat, saying that their property tax waiver for boats did not apply to boats owned by a corporation. Their logic was that a corporate owned boat was probably used for making a profit (charter, fishing, etc.) and therefore it should pay personal property tax. I ultimately transferred the boat into my name (a non-taxable event in Florida) and dissolved the LLC, thus avoiding the tax. I'm not an attorney, but I would think that if one purchased an LLC that owned a boat, in addition to getting a indemnity agreement from the seller, as a belt and suspenders approach to avoid any hidden liability, if their state allows (like Florida), the new owner could subesqently transfer the asset (boat) to their personal name and dissolve the LLC, just as I did.
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Old 07-01-2019, 02:28 PM   #20
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...You obtain membership in it by purchasing stock in it like you would by stock in any other corporation. You would normally obtain 100% of the shares in the LLC [...] My other bit of legal advise is not to seek legal advice from the internet....
Maybe California is different (it is or so I have heard) but I have never heard of an LLC selling or issuing stock, or having shares.

You have members and each member must be issued a K1 as the income from the LLC is passed through to each member.
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