All Forum Posts by: Keith Barton

@Mark Dillard It might be more helpful if you say where you are from, and if you ask one or more specific questions.

@Michael Johnson Why would anyone recommend anything they recommend? 1) Because they think they are correct; and/or 2) They will benefit by your following their recommendation. Not meant to be a snide comment - just my belief that one or both of those are true. Besides - you said the fee to set this up is $5,000? You've got to make something sound like it's worth the fee, right?

The challenge with the whole seminar/training/guru market is people make recommendations with claims that might not be accurate - however, by the time anything gets through the court system and a determination on that issue is made - the guru is long gone. The guru may fully believe what he espouses. The guru may even follow his own advice (if he is the type that is still out there investing, etc...) None of these things are simple. This stuff can be confusing as hell for a practicing lawyer, let alone someone who knows nothing about the law.

Interestingly enough, the area of law one is familiar with when creating business entities is not where you will find cases deciding these issues (that statement is a little misleading because any given court usually has cases touching on a wide variety of subject matters: most courts are not limited to special subject matters - except bankruptcy....) The area of law dealing with piercing the corporate veil has more to do with debt collection and bankruptcy. Debt collection cases are just in your garden variety everyday court. Bankruptcy cases however, are in bankruptcy court. Debt collection attorneys and bankruptcy attorneys are on different sides of the fence, but they are familiar with how their areas of law overlap.

Business entity attorneys however are not typically well versed in debt collection or bankruptcy matters (that is a very broad generalization that is unfair to may attorneys, I'm sure, but I think it makes my point well enough in a general manner). Therefore, even a business attorney advising a client on entity formation may not know what will or will not protect against piercing the corporate veil. Of course, even an attorney well versed in that area of law may not know what will or will not pierce the corporate veil, as structures have never been tested yet, and even then - courts are notorious for doing the unexpected....

Any tax advisors familiar with community property issues? I have an Ohio client with an estranged spouse in Arizona (a community property state) and I need to figure out how my client can file tax return without income and withholding information from husband.

Eric Thomson Which version of TurboTax are you using?

As I'm sure you can imagine, the IRS tends to view things in generalities and with a critical eye: if there is a trend for people to take a structure they don't want on a property, let a fire department burn the structure for training (and thereby have the structure removed without paying demo costs), then claim it as a charitable contribution - that doesn't sit well with the overseers. It wouldn't surprise me if somewhere along the way some auditor not only disallowed the deduction but also tried to argue that the avoided demo costs should be imputed as taxable income!

I don't have proof, but I suspect revocable trusts are the most common you will see. Buying a house owned this way is no different from buying a house from someone who doesn't own it through a trust. If you are looking through public records to see the name of the owner on the deed - a revocable trust is also known as a living trust or an inter vivos trust.

To actually donate the house you would have to transfer the deed to the fire department, which is much different than allowing them to train on your property.

Some things are treated differently on paper as compared to in practice. Certain things are in the contract because the bank wants whatever protection those clauses provide; however, they may let those things slide in practice knowing they can fall back on the contract language if they need to.

David Beard
You asked:
"what about the issue of establishing the LLC in a business-friendly state like Nevada or Wyoming (when the owner lives and holds his rentals in Ohio, for example)."

If the owner is in Ohio, the property is in Ohio, the tenant is in Ohio, and the cause of action (i.e., the disaster over which you are being sued) arises in Ohio. Where will the suit be filed? If you answered Ohio - you'd be correct.

What will an Ohio court do if the landlord is a NV LLC? The Ohio court will apply Ohio law. What advantage was there to creating the LLC in NV? None. Is any damage done by creating the LLC in NV? Possibly - the court sees everything is in Ohio, yet the business entity is in NV? The judge will ask (technical legal question coming up) WTF? And the judge may think you are trying to pull a fast one and be extra hard on you.

Question - what is the goal in forming a NV LLC to operate rental property in Ohio? My guess is that whatever your stated goal, forming the LLC in NV doesn't get you any closer to it than you could get by using a knowledgeable professional to form the LLC in Ohio.

Every tool has its use. Sometimes the tool is right for your situation and sometimes it is not. Sometimes a person is so enthralled with what the tool does for them (or thinks it does) or someone they know, that they sing its praises to all who will listen (I'm reminded of the old addage - when all you have is a hamer, everything looks like a nail.)

The best course of action is to learn as much as you can; tak to someone you trust; and, choose the course of action that makes the most sense for your circumstances and goals....