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

psneeld 08-01-2020 12:35 PM

I agree consult a tax attorney in the state you live....and/or call the state taxing authority that would review any LLC sales.



Don't believe ANY specific advice here.... as what happens one day in tax court isn't the same as the next for various reasons.

bligh 08-01-2020 12:36 PM

Quote:

Originally Posted by MYTraveler (Post 906747)
As logical as your intuition may be, California's law sees right through that. It deems the transfer of a majority interest in an LLC as a transfer of its assets, thereby triggering tax just as if the boat were sold directly.

Show me the 'law' you are citing

Swfla 08-01-2020 12:39 PM

OP states "I know that the boat is in a Delaware corporation. But that is all I know." Find out more from brokers that's why they are there. They have access to the agreement. Once you can give us more info, then any misunderstands we have can be cleared up. Hope that Bligh can provide more specific info. I'm sure forum members want the best for you. Three pages of posts based on this limited info is perhaps a symptom of COVID boredom.

SoWhat 08-01-2020 12:40 PM

Quote:

Originally Posted by Woodland Hills (Post 906751)
You example has nothing to do with buying an LLC whose sole asset is a boat, instead it is a dispute over state of residency and taxes owed as a result. This is a completely different matter and is governed by a different set of statutes and regulations.

The dispute was not over residency. The dispute was over where the boat was docked. If you dock a boat in MA for 6 months, you pay. LLC doesn't waive the requirement unless you apply for an exemption.

The taxman cometh.

bligh 08-01-2020 12:48 PM

That is property tax here in California. Not to be confused with sales tax.
Quote:

Originally Posted by SoWhat (Post 906763)
The dispute was not over residency. The dispute was over where the boat was docked. If you dock a boat in MA for 6 months, you pay. LLC doesn't waive the requirement unless you apply for an exemption.

The taxman cometh.


BandB 08-01-2020 12:56 PM

Quote:

Originally Posted by bligh (Post 906410)
Hey all, as you know I am in contract to buy a boat. But the boat is in an LLC so apparently I am in contract to buy an LLC that owns a boat. I dont think the broker has any clue what to do. I know that the boat is in a Delaware corporation. But that is all I know. Can anyone steer me in th right direction so I am informed as to what procedures I need to take and what documents I need to sign, have signed , and file and with what entity to file?

:)

Please, please, please get a local lawyer you trust to advise you. Some of the advice given in this thread is so far off base but then you asked a legal question on a boating forum. You need help as you said LLC and then Delaware Corporation which is the first clue you don't know as an LLC is not a corporation.

This has the potential of saving your a lot of sales tax dollars so worth a few hundred in legal fees. However, it also could potentially saddle you with debt or other obligations you have no knowledge of, coming along with the LLC and you need protection from that.

Also, even simple words in your sales contract can change what you're doing significantly, so even the best lawyer here wouldn't be able to give the advice you need without seeing it.

In general by buying an LLC you may or may not avoid state sales tax as some states still go after the transfer as a taxable event when an LLC changes hands. Also, by acquiring an LLC you acquire all it's assets and liabilities. Your potential loss is limited to them, no personal exposure beyond, but everything inside the LLC is at risk.

Nothing unusual about selling LLC's which own boats, planes, homes. Nothing though that a layman should do without an attorney.

Woodland Hills 08-01-2020 01:01 PM

[QUOTE=mvweebles;906758]
Quote:

Originally Posted by Woodland Hills (Post 906754)
........ or asking people in Florida for advice about taxes in California is like the cardiologist/ingrown toenail.

Im not sure how this thread took a turn towards nefarious tax avoidance. My recommendation to consult a skilled expert was because the path to taxation in California is complicated, LLC or not. The liability can exceed the actual sales tax due as the same folks also deal with annual property tax of the boat and the slip where it resides (the so called shadow tax - the land beneath your boat).

Most states, you pay the sales tax and you move on with your life which is also true in California. Unfortunately. That's not the only tax you will be liable for during ownership. I suspect it's not that complicated for knowledgeable persons. But God forbid of you run afoul.

Peter

I’ll say it again: tax AVOIDANCE is not nefarious. Tax avoidance is simply paying every cent you legally owe and not one penny more. One avoids paying taxes that are not owed. Evasion is the non-payment of legally owed taxes through illegal means, something very very different from the avoidance of paying un-owed taxes. If the powers that be did not want citizens using the tax code to their advantage they would change the rules, something they can do whenever they choose.

BTW, at the time we bought the LLC, we were California residents and had been for 30+ years. We also had bought and sold commercial real estate held by LLCs many times during that period of our lives. We also got a buy in from our California tax accountant on the Delaware LLC purchase as well as having a Florida attorney consult, write and review the contracts. We have dealt with the California BOE constantly for decades with no issues on this and other LLC transactions. It’s not hard: just hire an expert to advise and review.

Using an LLC to own an expensive asset is not rocket science! It is a routine everyday part of American business and is encouraged by the government through the tax code. There is nothing nefarious about it.

Comodave 08-01-2020 01:08 PM

People from other states will say just do it. They have never dealt with California BOE. Do not take anyones advice from Florida or anywhere else, get a lawyer that is intimately knowledgeable in California tax laws AND how it applies to boats and LLCs.

psneeld 08-01-2020 01:17 PM

https://www.thelog.com/ask-the-attor...o-own-my-boat/

from the above link...

"Similarly, corporate or LLC ownership will have almost no effect in California on the assessment of sales tax or on the annual assessment of personal property tax. It may be possible to transfer a boat into a newly formed corporation, or to purchase the corporation itself, without the assessment of sales or use tax. This may provide some savings when the boat will be owned by several partners, but the legal and practical requirements of these strategies are very complex and should not be considered without consulting a lawyer or tax professional.
Similarly, there may be some income tax benefits to corporate boat ownership, but your tax advisor will tell you that some form of business enterprise must accompany the operation and ownership of the boat."

Mark P 08-01-2020 03:48 PM

yes, as others have said, get a lawyer and, I would add, get an accountant, too! IMHO assets like these (boats, planes, buildings) are sometimes put in LLCs to take depreciation against taxes - there may be some recapture if you sell it or the LLC liquidates. Also, if you are buying the LLC itself be careful on other liabilities the LLC may have.

MYTraveler 08-01-2020 06:51 PM

Quote:

Originally Posted by Woodland Hills (Post 906751)
All the forum ďexpertsĒ can pontificate all they want, but having been through the process of buying a Delaware LLC, I know that this is a fully above board, completely legal process

Maybe in Jacksonville, but that doesn't mean it works in California. Anyone who knows California law will confirm that it does not.

MYTraveler 08-01-2020 06:53 PM

Quote:

Originally Posted by bligh (Post 906761)
Show me the 'law' you are citing

Or, you could google it yourself.

Comodave 08-01-2020 07:06 PM

I notice a thread inside a thread on this subject. It seems like everyone that has dealt with the California BOE says get a lawyer, everyone that has not dealt with them says go ahead and buy it since buying an LLC is so simple. Maybe the people that have actually dealt with the BOE know something...

bligh 08-01-2020 07:35 PM

Quote:

Originally Posted by Comodave (Post 906931)
I notice a thread inside a thread on this subject. It seems like everyone that has dealt with the California BOE says get a lawyer, everyone that has not dealt with them says go ahead and buy it since buying an LLC is so simple. Maybe the people that have actually dealt with the BOE know something...

Yes. There are those that have done this legally, some multiple times, who tell me to hire a lawyer to draw the paperwork (some have even referred me certain lawyers they used-which is exactly the information I needed).
Then there is everyone else who posted incomplete and/or wrong information that should have instead waited for a member who has knowledge and experience in these matters to post an educated reply.

Comodave 08-01-2020 07:56 PM

Yes, I went round and round with the BOE about 18 years ago. I was correct and they were trying to get me to bend over and pay tax when tax wasnít due. But I guess if people pay then they have gotten what they want. They then turned me in to the Arizona tax man. I went round and round with them but I was within the rules and didnít pay any tax to Arizona either. But they will fight you and bully you so it is best to let a knowledgeable attorney do the work and make sure you have everything correct so you donít owe any tax. Good luck.

mvweebles 08-01-2020 08:34 PM

My hunch is that the reason California tax authorities are so invasive has little to do with boats. The neighbor state to the east - Navada - does not have state income tax and is just a few hour drive from San Francisco. There are many, many, many people who have tried to arbitrage the high California taxes by claiming residence in Nevada. California is a big state, has a lot of wealth, and relatively high taxes so they've gotten good at enforcing tax codes. It's not enough to get a driver's license in Lake Tahoe, buy a car, and rent an apartment. They will go through cell phone logs and grocery receipts to see where you've been. They operate from the premise that it's better to convict 100 innocent people than allow one guilty person go free. Boats are just a byproduct of a highly profitable revenue system.

That said, my experience is that if you're on the up and up and not trying to defraud the system, it's a reasonable process. Having a trailblazer (attorney or similar) is a good idea to keep you from inadvertently going into a ditch. Chances are the fees you pay them are offset by leveraging legitimate deductions

To the OP - I'd be curious to hear how this turns out for you. Beautiful boat.

Peter

Art 08-01-2020 09:14 PM

Quote:

Originally Posted by mvweebles (Post 906983)
My hunch is that the reason California tax authorities are so invasive has little to do with boats. The neighbor state to the east - Navada - does not have state income tax and is just a few hour drive from San Francisco. There are many, many, many people who have tried to arbitrage the high California taxes by claiming residence in Nevada. California is a big state, has a lot of wealth, and relatively high taxes so they've gotten good at enforcing tax codes. It's not enough to get a driver's license in Lake Tahoe, buy a car, and rent an apartment. They will go through cell phone logs and grocery receipts to see where you've been. They operate from the premise that it's better to convict 100 innocent people than allow one guilty person go free. Boats are just a byproduct of a highly profitable revenue system.

That said, my experience is that if you're on the up and up and not trying to defraud the system, it's a reasonable process. Having a trailblazer (attorney or similar) is a good idea to keep you from inadvertently going into a ditch. Chances are the fees you pay them are offset by leveraging legitimate deductions

To the OP - I'd be curious to hear how this turns out for you. Beautiful boat.

Peter

"Beautiful boat" - Guess I missed the link/photo to that??? Did read $400K value in some early post. Where do I locate the boat? :popcorn:

bligh 08-05-2020 11:04 AM

Update
 
A TF member was kind enough to give me the contact information of a local attorney he used to handle his LLC transaction. I gave the attorney a call and he called me back within a few hours. After verifying a few things about the transaction he recommends keeping the LLC in place and that way I will save tens of thousands in CA sales tax. His costs are roughly $3000 to handle the transaction and paperwork . Annually, there is a fee to the state of Delaware for $300. I'm not sure but I may need to file a tax return for the LLC annually as well, so another couple hundo to an accountant.
It turns out that this attorney handled the last LLC transaction on this boat as well.

Woodland Hills 08-05-2020 11:11 AM

Quote:

Originally Posted by bligh (Post 908635)
A TF member was kind enough to give me the contact information of a local attorney he used to handle his LLC transaction. I gave the attorney a call and he called me back within a few hours. After verifying a few things about the transaction he recommends keeping the LLC in place and that way I will save tens of thousands in CA sales tax. His costs are roughly $3000 to handle the transaction and paperwork . Annually, there is a fee to the state of Delaware for $300. I'm not sure but I may need to file a tax return for the LLC annually as well, so another couple hundo to an accountant.
It turns out that this attorney handled the last LLC transaction on this boat as well.

Exactly what I suggested in post #46: keep the LLC, hire an attorney and save tens of thousands of dollars.

Art 08-05-2020 11:13 AM

Quote:

Originally Posted by bligh (Post 908635)
A TF member was kind enough to give me the contact information of a local attorney he used to handle his LLC transaction. I gave the attorney a call and he called me back within a few hours. After verifying a few things about the transaction he recommends keeping the LLC in place and that way I will save tens of thousands in CA sales tax. His costs are roughly $3000 to handle the transaction and paperwork . Annually, there is a fee to the state of Delaware for $300. I'm not sure but I may need to file a tax return for the LLC annually as well, so another couple hundo to an accountant.
It turns out that this attorney handled the last LLC transaction on this boat as well.

Sounds as though you have items well in hand! :thumb:

Seevee 08-05-2020 11:45 AM

Bligh,


Glad you got an attorney, if NOTHING else, if the shit hits the fan you have someone to defend you, worth the price alone.


I would have done similar. LLCs, Corps, Trusts are sold and traded ALL the time, without the assets being taxed. Totally legal.



Been there and done that will several LLCs, but only have one left. And bought and sold in California. Yes, they are pricks, and will harass you. I simply sent them one letter stating that what I did was totally legal and they could bend over and f themselves. Never heard from them again. (well, there's an argument not to provoke them, but was fun)



Over the years I've gravitated to trusts for holding assets, a MUCH better option for me. No fees, no recording, no reporting, anonymous, situs anywhere (or hidden), etc.



One HUGE reason people use LLCs and Trusts is liability. If they are not operating the vessel, plane or car, there is zero liability. Been there, too.



As for sales tax, that's a state thing, so one needs to know that states laws. And, that's quite often base on where the boat is. As for a tax (federal) return on this stuff, perhaps not necessary, even if you're in business and it produces a profit (just have it flow thru to you personally or another entity).


Often, tax is triggered with the "owning" entity sells the asset to another entity, so title changes. There's still ways to legally avoid sales tax, on example is for estate planning purposes.


However, the absolute BEST advise here is, get a GOOD attorney if you don't know this stuff cold.

BandB 08-05-2020 12:17 PM

Quote:

Originally Posted by bligh (Post 908635)
A TF member was kind enough to give me the contact information of a local attorney he used to handle his LLC transaction. I gave the attorney a call and he called me back within a few hours. After verifying a few things about the transaction he recommends keeping the LLC in place and that way I will save tens of thousands in CA sales tax. His costs are roughly $3000 to handle the transaction and paperwork . Annually, there is a fee to the state of Delaware for $300. I'm not sure but I may need to file a tax return for the LLC annually as well, so another couple hundo to an accountant.
It turns out that this attorney handled the last LLC transaction on this boat as well.

Yes, you will need to file tax returns for the LLC. Glad you got a local attorney knowledgeable in this regard. What a coincidence he handled the previous transaction.

There was a key phrase, I want to point out and that is "After verifying a few things about the transaction." Even the most knowledgeable attorney can't give you an answer without a few questions and without getting very specific. That's why getting information from others is limited in value as your situation may not be exactly what theirs was.

texasnielsen 08-07-2020 09:59 AM

Quote:

Originally Posted by Art (Post 906994)
"Beautiful boat" - Guess I missed the link/photo to that??? Did read $400K value in some early post. Where do I locate the boat? :popcorn:

I believe it is this one. https://www.yachtworld.com/boats/198...ketch-3656943/

Best wishes to Bligh for a long, safe and enjoyable ownership of her. Sounds like your LLC questions have been addressed.

guy with a boat 08-07-2020 10:18 AM

Quote:

Originally Posted by BandB (Post 908666)
Yes, you will need to file tax returns for the LLC. Glad you got a local attorney knowledgeable in this regard. What a coincidence he handled the previous transaction.

There was a key phrase, I want to point out and that is "After verifying a few things about the transaction." Even the most knowledgeable attorney can't give you an answer without a few questions and without getting very specific. That's why getting information from others is limited in value as your situation may not be exactly what theirs was.

Filing a tax return on an LLC isnít necessarily required if that entity has no income or deductible expenses, as is often the case when its only asset is the boat. Filing a return would be required if the is boat being chartered or otherwise operated as a business. State requirements on this may vary, and the attorney handling the acquisition will be able to give advice specific to a given LLC.

Codger2 08-07-2020 11:04 AM

Quote:

Originally Posted by guy with a boat (Post 909295)
Filing a tax return on an LLC isnít necessarily required if that entity has no income or deductible expenses, as is often the case when its only asset is the boat.

Relative to my own LLC, that has been the advice my tax attorney has given me.:blush:

koliver 08-07-2020 11:13 AM

Quote:

Originally Posted by MYTraveler (Post 906457)
Talk to a knowledgeable lawyer. It will not work, very likely you will get caught (though it may take a few years), no statute of limitations will protect you (since you will not have filed a return), so in addition to the tax (and I believe the rate is closer to 10%, but it does vary a little by county), you will have to pay penalties and interest.

At its simplest, the purchase of an LLC does not attract sales tax, as that is a tax on goods, not on the transfer of the owner of the goods. You are buying shares (all of them) in the owner of the goods, the goods (the boat) are not being sold. After the transaction the shares have a new owner, you, but the boat has stayed with the old owner, the LLC.

On the cautionary side, the liabilities of the LLC haven't gone anywhere, so you need to have your lawyer do the required due diligence to determine what liabilities exist, if any. Once you are satisfied with your lawyer's due diligence, the shares can transfer to you and no sales tax liability is attracted.

When it is time for you to sell, you can choose to sell the LLC and face the skepticism of buyers over those liabilities again, or you can sell the asset, and the buyer will have to pay the tax.

You will also need to educate yourself as to the annual responsibilities of the LLC. You have to maintain the LLC in its State registry, get an annual report done by an accountant and file an income tax return for the LLC. The costs involved will eat into your savings by not having attracted sales tax. Those expenses will continue as long as the LLC exists, so may exceed your initial savings if the purchase price is low.

That is how it works in Canada, where boats can be held by a Provincially or Federally registered Corporation, or Limited Liability Corporation (LLC). The same concepts should apply where you are.

Seevee 08-07-2020 11:44 AM

A few more comments worth discussing with your attorney..... (and tax man):


First an LLC does not have to file a tax return, regardless if it make money or not. Ask you accountant.


Second, the fees for the LLC are not humongous I just renewed mine for $138 (FL), annual report is a non issue and has no real info, other than what the state already has, so there is no personal info, corp records, amendments (unless you change info the state has, resolutions, etc. Had and IL and WI one, too, and suspect most states are similar


Third, there IS a way to transfer the stock from the LLC to another LLC or corp without a tax consequence, but eliminates any liability of the first one. Went thru that in the sale of one of my businesses, but the legal fees were up there.


Forth, there "might" be a way to transfer the stock to a trust, worth asking but I've never personally done that.


Fifth, the trust has all the benefits (and more) of the LLC, without the costs or hassles (for the purpose of boat ownership). Worth asking about. I've created and use hundreds of trusts..... that's my thing. But I do get educated and attend class every now and then to stay current. My ladder is owned by a trust... ask me why. Now, the ladder trust has never been challenged but I've benefited MANY time from a liability standpoint with a trust. However, one must know the ins and outs.... there are gotchas. Now, using a trust for a business is not thought of as a good idea, but great for holding stuff.


Now, here's a question that might come up.....


Let's say you buy the LLC, and it's situs is the state of X. But you live in the state of Y and want to purchase a registration to use the boat in state of Y, what issues might you come across? And, if you move the trust to state Y to use it there, you still register it.... issues? Never done that one, yet.

Chrisjs 08-07-2020 12:44 PM

I established a Delaware LLC. Funded the LLC with my capital. LLC purchased vessel. Kept vessel in RI. No sales tax. I did continue funding the LLC adequately to cover costs like insurance, dockage, repairs and LLC-related fees. Being a bit anal, I also kept track of all incomings (nil) and outgoings in a simple accounting software package. It was quite interesting to see where all the money went during my ownership (of the LLC)!!!
Several years later, sold LLC which still owned vessel. Buyer paid no sales tax in MA or anywhere else. Management of LLC is child's play. Fees are minimal. Tax return not needed because there is no business being transacted - no income to report. Only, annual report and fees to Delaware. Did not need to do this - my LLC was clean and buyer was not concerned - but would seem reasonable to get an indemnity from the seller who presumably would know of any reasons for liability concerns.

Ross Macdonald 08-07-2020 12:58 PM

We used Paul Trusso right in Pt. Loma. He handles the purchase and sale of LLC's where the boat is the sole asset of the corporation. He will do a search to see if any liens are against the LLC or any prior taxes are owed. We found the LLC our boat was in when we bought it in Seattle had Washington taxes owed. So we refused to buy the LLC and purchased the boat out of the Corporation. He can do a search for you and if it is clean then you purchase the LLC. It does make it easier to sell a boat in California as far as tax liability. Ross

pjnorth 08-07-2020 01:13 PM

Quote:

Originally Posted by caltexflanc (Post 906430)
You are in a contract to buy a boat from an LLC. Not the LLC itself. If your contract reads otherwise, get the broker to straighten that out.

... actually he IS buying the LLC which owns the boat. This approach voids sales tax since an LLC is not personal property.

Pianomn255 08-07-2020 01:33 PM

The only time I ever saw that it might be prudent to buy the LLC was when there was multiple assets in the corporation i.e., boat, slip, charter company, etc. and you are buying the whole enchilada. I agree that you need an attourney to handle a transaction like that!

asvan1w 08-07-2020 01:36 PM

Youíre UNDER CONTRACT and now youíre asking? Youíre under contract to buy a boat but apparently are buying the LLC. Donít mean to be snarky but maybe would be helpful to read what you signed? Sigh...

bligh 08-07-2020 01:42 PM

Quote:

Originally Posted by asvan1w (Post 909370)
Youíre UNDER CONTRACT and now youíre asking? Youíre under contract to buy a boat but apparently are buying the LLC. Donít mean to be snarky but maybe would be helpful to read what you signed? Sigh...


HI. Welcome to TF. Thanks for your input. I already have the issue straightened out thanks to the members here. I apologize if i caused you any discontent- I am clearly not on the same intellectual level as you are.

Best,
Scott

Swfla 08-07-2020 01:47 PM

It did take him 5 posts since 2018 to come up with that nugget of helpful advice.

ljk 08-07-2020 02:50 PM

Quote:

Originally Posted by bligh (Post 906448)
I do need to buy the LLC. If I buy the LLC , then I avoid CA sales tax (8%).




Don't waste your money on a lawyer, because no lawyer is going to give you the answer you want!



Go ahead and do what you want, then PRAY that you don't have any liability from unknown creditors of the LLC!

tn6437 08-07-2020 03:06 PM

my son and his wife bought a llc that owned a boat. it is no different than buying a business, which in reality is what it is.all that you need to be concerned about is that you are only purchasing the assets of the llc, be certain that there are no liabilities attached. any good corporate lawyer can draw up the purchase agreement to protect you. the llc will need to file annual tax returns , for income and expenses. you can easily turn your boat into a rental and write off all the expenses.

BandB 08-07-2020 03:06 PM

Quote:

Originally Posted by guy with a boat (Post 909295)
Filing a tax return on an LLC isnít necessarily required if that entity has no income or deductible expenses, as is often the case when its only asset is the boat. Filing a return would be required if the is boat being chartered or otherwise operated as a business. State requirements on this may vary, and the attorney handling the acquisition will be able to give advice specific to a given LLC.

I should have said an annual filing which would differ based on circumstances. In some cases it would simply be an annual report. However, the state of Delaware does not require that but they do require the annual payment of a $300 tax. Penalty for non payment or late payment is $200.

This just points out the need to get specific advice from experts who know your details.

Swfla 08-07-2020 03:16 PM

Quote:

Originally Posted by ljk (Post 909412)
Don't waste your money on a lawyer, because no lawyer is going to give you the answer you want!



Go ahead and do what you want, then PRAY that you don't have any liability from unknown creditors of the LLC!

You must have missed post 68.

SDR 08-07-2020 04:26 PM

Have you owned a business before? Get ready to pay $800 per year minimum tax, and file quarterly corporate tax returns. A tax firm charges a lot to do business taxes. Just buy the asset, unless it's a charter and you actually want to go in business and make profit with the boat. Don't let some person talk you into something you are not required to do.

Stradale 08-07-2020 04:38 PM

I've used Wenthur Law Group in SD twice. Bullet proof and worth their costs to make sure it is/was done correctly.



Will McTaggart, Legal Assistant
Wenthur Law Group, LLP
4121 Napier Street
San Diego, CA 92110
(858) 284-6555 Ė Cell
(619) 398-9050, Ext. 204 - Direct Dial
(619) 398-9051 - Fax

Comodave 08-07-2020 04:45 PM

Quote:

Originally Posted by SDR (Post 909447)
Have you owned a business before? Get ready to pay $800 per year minimum tax, and file quarterly corporate tax returns. A tax firm charges a lot to do business taxes. Just buy the asset, unless it's a charter and you actually want to go in business and make profit with the boat. Don't let some person talk you into something you are not required to do.

I owned an LLC for almost 20 years and didnít have any of these issues.

ProMaritime 08-07-2020 07:09 PM

As mentioned, if you buy the LLC the boat will still belong to the LLC. If the LLC has other debts, liabilities or pending or existing law suits that have nothing to do with the boat they will still go right along with the LLC if you buy it as a means to acquire the boat.

If the boat or the LLC or both have liens against them those creditors may be able to attach the boat, an asset of the LLC, and force a sale to satisfy the creditors.

If so you could end up with an empty LLC, no boat and lots of money down the drain. Could be a very expensive way to beat the California tax collector.

Swfla 08-07-2020 07:57 PM

ANY boat can have a lien on it preventing transfer of title. It's not just LLCs. Liens and lawsuits must be filed with the courts. A search can be done in the name of the LLC before closing. I'm confident that Scott will continue to check on things. The fact that he's here and discussing it shows that he's aware and exercising care. He's already discussed this with the law office who dealt with this exact LLC during the sale to the current owners. I think he'll have more headaches driving through LA traffic than from the LLC!

OldDan1943 08-07-2020 08:18 PM

The owner of the LLC can remove/buy that particular asset from the LLC then, sell the asset (boat) to you.
The owner can dissolve the LLC by removing all assets from the LLC or you can wait until the LLC expires.
I am not an attorney.

Seevee 08-07-2020 08:50 PM

Quote:

Originally Posted by SDR (Post 909447)
Have you owned a business before? Get ready to pay $800 per year minimum tax, and file quarterly corporate tax returns. A tax firm charges a lot to do business taxes. Just buy the asset, unless it's a charter and you actually want to go in business and make profit with the boat. Don't let some person talk you into something you are not required to do.




SDR,
I find this info hard to believe. Many of us have had business, LLC and other entities. I've never heard of the above tax. And quarterlies may or may not be required. AND, you don't need a tax firm to do this, but in a small business I'd be surprised that you couldn't get a competent accountant that would do everything for way south of $3K a year... more like half that.


Depends on what you need. I typically hire my own bookkeeper who will do 95% of the work pretty reasonable, and have an outside accountant, NOT a CPA, but who will fight the IRS for you, if needed, and that is pretty cheap.

Seevee 08-07-2020 08:51 PM

Quote:

Originally Posted by Swfla (Post 909521)
ANY boat can have a lien on it preventing transfer of title. It's not just LLCs. Liens and lawsuits must be filed with the courts. A search can be done in the name of the LLC before closing. I'm confident that Scott will continue to check on things. The fact that he's here and discussing it shows that he's aware and exercising care. He's already discussed this with the law office who dealt with this exact LLC during the sale to the current owners. I think he'll have more headaches driving through LA traffic than from the LLC!


Swfla,



Totally true, and often pretty easy. ANY liability that can be perfected can be found out, most likely in the courts. Buying LLCs and other businesses is done ALL the time. Not rocket science.



Sounds like the OP is certainly on the right track.

BandB 08-07-2020 09:30 PM

Quote:

Originally Posted by SDR (Post 909447)
Have you owned a business before? Get ready to pay $800 per year minimum tax, and file quarterly corporate tax returns. A tax firm charges a lot to do business taxes. Just buy the asset, unless it's a charter and you actually want to go in business and make profit with the boat. Don't let some person talk you into something you are not required to do.

Have you ever owned one that wasn't doing business? You don't have to pay $800 per year minimum tax and you don't have to file quarterly corporate tax returns. Your entire post is just totally inaccurate for the LLC he's dealing with and it's purposes.

He does have the $300 annual tax to Delaware and he has to file but not pay anything an annual partnership or S Corporation federal return depending on his election of treatment.

drb1025 08-07-2020 10:35 PM

So much fear mongering. I purchased an LLC that owns a boat almost 10 years ago. No sales taxes but I paid $5k for a good lawyerís diligence. Since then Iíve paid $60 annually to file a report with the state to keep the LLC active. No tax returns or other reports needed. Thatís it.

RickyD 08-07-2020 11:05 PM

Quote:

Originally Posted by caltexflanc (Post 906430)
You are in a contract to buy a boat from an LLC. Not the LLC itself. If your contract reads otherwise, get the broker to straighten that out.

Its best to buy the LLC that owns the boat as I did. Done properly you will avoid State sales tax. There should be no sales tax on a business purchase. When you buy a business you don't pay sales tax on all the office equipment, etc.

bligh 08-08-2020 01:27 AM

Quarterly corporate tax returns?! 800 a year minimum tax? Holy crinkly. Im calling this whole thing off!
Quote:

Originally Posted by SDR (Post 909447)
Have you owned a business before? Get ready to pay $800 per year minimum tax, and file quarterly corporate tax returns. A tax firm charges a lot to do business taxes. Just buy the asset, unless it's a charter and you actually want to go in business and make profit with the boat. Don't let some person talk you into something you are not required to do.



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