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-   -   Buying an LLC (https://www.trawlerforum.com/forums/s62/buying-llc-52331.html)

catalinajack 07-31-2020 08:07 PM

Buying an LLC has nothing to do with maritime law. This is just basic commercial law. The boat travels with the corporation as does all of the corporation's assets and it's LIABILITIES. No change of ownership of the boat, no sales tax. But, buy the LLC and you assume responsibility for any and all liabilities, known and unknown. Good luck with that.
Quote:

Originally Posted by DavidM (Post 906425)
:iagree: David


mvweebles 07-31-2020 08:14 PM

Quote:

Originally Posted by catalinajack (Post 906508)
Buying an LLC has nothing to do with maritime law. This is just basic commercial law. The boat travels with the corporation as does all of the corporation's assets and it's LIABILITIES. No change of ownership of the boat, no sales tax. But, buy the LLC and you assume responsibility for any and all liabilities, known and unknown. Good luck with that.

I agree Catalina Jack. It would be like buying a truck or a piece of equipment from a corporation. The difference is that in California, the tax authority is super alert to tax issues related to boats. They have spent over 30 years busting the balls of boat owners, often seeking taxes long after the vessel has left California. Even my measly Willard 36 required some positive proof she'd left California waters for good when I brought her to Mexico 1.5 years ago.

LLC or not, the OP would do well to have a knowledgeable person in his corner. It's super easy if you know where the speedbumps are

Peter

caltexflanc 07-31-2020 08:21 PM

I have used Deborah Malkin in Santa Cruz (Soquel) for various estate and business structure matters. Dmalkin@malkintrust.com (831) 462-9100

If for some reason I can't think of, she won't help you, then I can strongly recommend Kevin McCollough of Spaulding, McCollough and Tansil (SMT) in Santa Rosa, who has done a whole bunch of LLC and tax-related work for us over the course of the last five years.
(707)524-1900 mccllough@smlaw.com

Codger2 07-31-2020 08:44 PM

Quote:

Originally Posted by mvweebles (Post 906512)
LLC or not, the OP would do well to have a knowledgeable person in his corner. It's super easy if you know where the speed bumps are.

Mvweeble's advice is right on the money!

Get a lawyer who specializes in LLCs that own boats. My boat is in an LLC as are dozens & dozens of boats in SoCal. It's done every day down here and as some others have pointed out, it's a piece of cake when a knowledgeable attorney who does this for a living is involved. The attorneys fees down here are approximately
$3K to set up an LLC or transfer one. Most brokers in my area are quite familiar with these transactions & can recommend attorneys.:oldman:

caltexflanc 07-31-2020 08:53 PM

A boat is simply an asset of an LLC, no different than pieces of real estate or a car collection or works of art.

syjos 07-31-2020 09:03 PM

An attorney is an unnecessary expense. They will overly complicate the deal, which will result in more money spent. A LLC is technically not a corporation. It's a Limited Liability Company. It's used mostly to separate assets to protect them from liability. It is simple compared to a C or S corporation.

Treat the LLC as a person and buy just the boat from it.

Jeez, it's not a big deal. I formed several LLC's, buy and sell personal and real property belonging to the LLC and so far in over 35 years, have never consulted an attorney pertaining to the LLC or wished I had. The cost in Washington to form a LLC is $180 and $60 annual renewal.

Difficulty arises when sales tax avoidance is the goal.

There are so many online sources for LLC information and the Secreatary of State for your state should also have help available.

mvweebles 07-31-2020 09:04 PM

Quote:

Originally Posted by caltexflanc (Post 906530)
A boat is simply an asset of an LLC, no different than pieces of real estate or a car collection or works of art.

Normally I'd agree, but with all due respect, there are certain assets in California that draw a lot of unwanted attention. A boat is one of them.

Codger2 07-31-2020 09:12 PM

Quote:

Originally Posted by syjos (Post 906532)
An attorney is an unnecessary expense.................. Treat the LLC as a person and buy just the boat. .

Not something I'd want to do!The OP is in California. Hiring an attorney to transfer the LLC is cheap compared to the tax you will pay if just purchasing the LLC's asset.

Comodave 07-31-2020 10:25 PM

Quote:

Originally Posted by syjos (Post 906532)
An attorney is an unnecessary expense. They will overly complicate the deal, which will result in more money spent. A LLC is technically not a corporation. It's a Limited Liability Company. It's used mostly to separate assets to protect them from liability. It is simple compared to a C or S corporation.

Treat the LLC as a person and buy just the boat from it.

Jeez, it's not a big deal. I formed several LLC's, buy and sell personal and real property belonging to the LLC and so far in over 35 years, have never consulted an attorney pertaining to the LLC or wished I had. The cost in Washington to form a LLC is $180 and $60 annual renewal.

Difficulty arises when sales tax avoidance is the goal.

There are so many online sources for LLC information and the Secreatary of State for your state should also have help available.


Have you ever dealt with California BOE? They are something else. You had better have your ducks in a row before they come after you. I bought a boat in Washington State and later ran it to California. I finally convinced them that I didn’t owe California sales tax so they contacted Arizona and told them to go after me since the boat was home ported in Tucson, even though the boat never entered Arizona. If I were doing this purchase I would get an attorney that has extensive boat experience. Period.

Beaverlake 07-31-2020 11:49 PM

Purchasing an LLC to acquire a boat is not voodoo. It is a normal practice in states like CA and WA. There is good advice about getting a competent experienced attorney to make sure you aren’t assuming nasty liabilities. This is no illegal dodge or anything close. We investigated a boat in WA and a boat in CA along the last purchase path. Both were LLC owned. We ended up passing on the boats but not because of the LLC issue. We should not be giving advice beyond “get an experienced attorney” unless one of us has direct experience purchasing a Delaware LLC in CA as part of the process to acquire its assets (i.e., a boat).

guy with a boat 08-01-2020 12:04 AM

Quote:

Originally Posted by syjos (Post 906532)
An attorney is an unnecessary expense. They will overly complicate the deal, which will result in more money spent. A LLC is technically not a corporation. It's a Limited Liability Company. It's used mostly to separate assets to protect them from liability. It is simple compared to a C or S corporation.

Treat the LLC as a person and buy just the boat from it.

Jeez, it's not a big deal. I formed several LLC's, buy and sell personal and real property belonging to the LLC and so far in over 35 years, have never consulted an attorney pertaining to the LLC or wished I had. The cost in Washington to form a LLC is $180 and $60 annual renewal.

Difficulty arises when sales tax avoidance is the goal.

There are so many online sources for LLC information and the Secreatary of State for your state should also have help available.

Sometimes trying to save money by not hiring a pro is actually far more expensive. This is one of those times.

Soo-Valley 08-01-2020 12:16 AM

Why was the boat owned by an LLC comes to mind? Tax benefit? Capital gains/loses?
What if you buy the LLC at market value of the boat that was depreciated for tax savings, are you liable for repaying the difference? Does the LLC have debt that you inherit?

Sure a lawyer may weed this out, but it would be easier to buy the boat from the LLC, pay the sales tax and not have to look over your shoulder.
Mind you if there is a lien on the chattel (boat) then that has to be cleared.

guy with a boat 08-01-2020 12:17 AM

Bligh,
There are absolutely safe and legal tax management strategies available that will make a sizable difference in your tax bill. Consult with an attorney (Wenthur is great) as early in the deal as possible. There is no need to incur great expense or take on mysterious liabilities.
It’s amazing how much BS is posted in these LLC threads. I don’t know if people just repeat it from reading it somewhere else on the internet, or if they hear it on the docks. Regardless of the source, much of it is bad info.
I don’t claim to be an expert, but I’m smart enough to hire one. I do own and have owned quite a few LLC’s and have bought and sold them, with and without boats involved, and I am a long-time California resident. Just know the laws and follow them. California (and other) tax authorities are tough but follow the law and you can minimize taxes and still sleep like a baby.

BruceK 08-01-2020 12:48 AM

Unless it`s different there, you don`t "buy" a corporation. It is a legal entity,in the same way as a person is a legal entity. It exists separate and apart from those with an "interest" in it.
You buy the issued shares(stock I think you call it) from the existing holders. The existing company officers resign and you and or nominees take on the roles. That way, you own the shares and gain control.
The Corporation owns what it owns, owes what it owes, comes with its history which may be good or frankly alarming. And hopefully indemnities from actual people you can recover from if it`s not all as claimed.
You definitely need legal advice.It`s an area fraught with risk. Probably all is well, but it needs to be approached carefully by knowledgeable people.

Comodave 08-01-2020 01:33 AM

I am not saying, or do I think that anyone was saying it is a tax dodge. Only thing I am saying is make sure you do it correctly and it is very easy not to do it correctly and incur tax and penalties. Just get a good lawyer. It will be worth it.

PPandE 08-01-2020 06:22 AM

I’ve done it both ways, with both boats and planes. I recently sold an LLC whose only assets were a plane and a checking account. Transferred the stock, no taxes. I also owned another LLC which owned a boat as well as other assets. The LLC sold the boat resulting in the buyer paying taxes.

Get a business savvy lawyer. Yesterday.

caltexflanc 08-01-2020 06:55 AM

Quote:

Originally Posted by mvweebles (Post 906536)
Normally I'd agree, but with all due respect, there are certain assets in California that draw a lot of unwanted attention. A boat is one of them.

Let me assure you, after plenty of direct experience, there is NO asset that doesn't get the attention of California tax authorities.

psneeld 08-01-2020 07:05 AM

I have read at least one case where an LLC formed to protect ONLY a boat used solely by the owner for pleasure was actually "tax evasion" and was subsequently taxed the moment the boat entered the state.

I dont know as much as many here, but I would be leaning towards a tax attorney more than anyone. LLCs for boats, RVs and planes are pretty common ( a real cottage industry in some states) and depending on what tha states tax divisons think at the time might be the most useful.

Legal and tax advice from forums seems to be one of the most confusing topics and hard to sift out what really applies in your case.

One common thought is...just because it works for one person doesnt mean it will work for you.

Art 08-01-2020 08:15 AM

Bligh - I recommend... Get a knowledgeable attorney.

From what I understand the boat price is in the $400K range. If you spend $4K on an attorney... that 1% cost for "legal" financial safety is a bargain! And, if the LLC has next to no background needing research the lawyer cost may be even more affordable.

I have owned a C corp in CA. I own an LLC in DE. And, a sole proprietorship in CA.

If you want to play in and go through "tax hell"... then, the "CA State Board of Equalization" is the operation to get into conflict with; their lawyers are treacherous, and, love to be thought of as such.

Good luck!

Codger2 08-01-2020 09:36 AM

Quote:

Originally Posted by guy with a boat (Post 906608)
It’s amazing how much BS is posted in these LLC threads. I don’t know if people just repeat it from reading it somewhere else on the internet, or if they hear it on the docks. Regardless of the source, much of it is bad info.

Thanks for having the guts for your post! I was thinking the same thing but lacked the fortitude to say it in a post. :thumb:


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