STR in TN (Pigeon Forge) Asset protection - How to hold deed?

[John Underwood]

For those of you with STR properties in Pigeon Gorge, Gatlinburg (Tennessee) how do you hold title?

I talked to a TN attorney this morning and he said if you own an LLC there is a $4,000 annual franchise fee and you have to pay an excise tax on the annual earnings.

When I pressed for options he said we could:

Create 4 trusts (one for each owner (brothers and sister) that on the LLC. He said this would eliminate the $4,000 franchise fee, This would cost $10,000 to set up. This would pay for itself in 5 years if it avoided the $4,000 yearly fee.

I know many of you have properties in TN. How do you hold title to your properties and what annual fees do you pay?

It looks like some people are recommending to hold in your name and just have good insurance and possibly an umbrella policy.

@Avery Carl @Luke Carl @Collin Hays @Ken Boone 

[Kevin Luttrell]

Hey @John Underwood, I've been doing a ton of research on this exact thing lately and am happy share what I've found. I have a cabin in Sevierville held in a single-member LLC and 4 others in a 2-member LLC. The franchise and excise tax is no joke.

It seems many people including attorneys and CPAs aren't aware of the exemptions for TN's franchise and excise tax. Here's the link: https://www.tn.gov/revenue/tax...

In your case it looks like you may qualify for the FONCE exemption since all owners are family members. Here's more info on that one: https://www.tn.gov/revenue/tax...

I just applied for exemptions with TNTAP this week so I haven't heard back yet. I've seen others in these forums who said it was no problem getting approved for the FONCE exemption for their single-member LLC so I'm hopeful on that one. My other LLC is owned with my father-in-law and I can't find anything online that defines "family member" for the exemption, so we'll see what they say on that one. I have to imagine owning with your brothers and sister would qualify though, assuming other requirements are met.

Another potential exemption is #9 on the list - if the members are fully obligated for the debts of the entity (recourse financing) then you may qualify.