All Forum Posts by: Rob C.

@Michael Plaks - has the FTB ever won on this issue? if so, then I understand the perspective you’re sharing. I’ll echo my previous post on page 1 of this thread for anyone who can answer it : Are you familiar with any court cases where the FTB has prevailed on this matter (especially with the aforementioned combination of trust and LLC)? I've heard the same thing from others that the FTB has and always will win in court, but no one I've talked to has been able to point to any such cases that I can read up on to verify. I've also spent a fair share of time trying to search google and justia for them myself, but I've come up empty. Conversely, I've come upon cases like the ones described here (which I acknowledge is not the same context): https://www.thetaxadviser.com/... I’m not an attorney, but I would be grateful to be directed to any case law I can read for my own edification if it shines more light on this topic.

For what it’s worth I do know a few investors that are “willing to fight this battle” - they just don’t see it as fighting a battle. They invest out of state and don’t pay the franchise tax because they don’t see any reason they should have to. I’m just wondering why so many on here “assume it is a losing battle.” Do they know something I don’t? Or is it merely a common misconception propagated by everyone who believes it?

@Lynnette E., Interesting that you and @Michael Plaks interpreted my comments this way. It’s the opposite in fact. I don’t expect “someone to agree with what [I] want to do” given the overwhelming number of people that express a sense of certainty to the contrary across many different forum threads. I did expect, however, that at least a few of those people would step up and point to the sources of information substantiating their opinions (and my hunch was that it would probably be an ambiguous part of the tax code that I would have to interpret and base my decision on). I respect that you have at least replied Lynette, but it’s clear you are more interested in saying you know what you’re talking about rather than showing it.

I’m surprised by how idle this thread has become. @Lynnette E. and @Greg O'Brien, I hope you didn’t interpret my previous questions as rhetorical. I’m genuinely interested in understanding where you’re coming from.

@Katie Lepore - are you able to weigh in on how your published opinion reconciles with the situation / structure I’ve described?

@Eamonn McElroy and @Basit Siddiqi - since you seemed certain at the outset of the previous/removed thread that the franchise tax would be owed, it’d be great to hear your elaboration. Also, since that thread wasn’t nearly as specific as this one when you commented, I’m curious if the additional context changes the matter in your mind at all. I’m sure that as accountants you’re more familiar with the tax code than most and it would be great to understand which parts support your opinions

thanks for the elaboration @Dan H.. I wasn't tuned into the Del Mar situation. Interesting decision there to limit it to 100 days. Seems like if you're going to invest down in this area with STR intentions you better try to get a sense of the city's tolerance for STRs, whichever city that may be in the county. I don't think that just goes for coastal areas. Intuitively speaking, I would think inland areas might push against STRs harder than coastal areas because they tend to be made up more of the bedroom communities where neighbors don't take kindly to the idea of short term guests looking for a party pad. And that might be a reason I would favor west of 5, or even west of coast highway, @Javier Mendez. The main reason I purchased here was because of the upside potential from all the growth and development in the downtown area. It’s been a tourist destination for a while, but I think it will continue to garner more and more attention from out of towners. It’s definitely much pricier though, no doubt about that. It all comes down to numbers and I don’t have any sense personally how well a more inland STR would pencil. You should take a look and compare. Also be aware that immediately east of the 5 is a very different neighborhood than west. I wouldn’t buy an STR there. Not saying it’s a bad place to invest. Over the long term it could be a good appreciation play. But just know not to use comps on the opposite side of the freeway no matter how close they seem. 

@Tim S., take a look at the parallel thread I referenced for why your understanding of the franchise tax may not be entirely true: https://www.biggerpockets.com/... (still TBD per ongoing discussion there)

I can vouch for Oceanside given that I live there close to the beach. Lots of exciting transformation and development here in the downtown Oceanside area over the past decade, and seems poised to continue. There are a couple condo complexes in this area that permit vacation rentals including the one I am in. I used to AirBnB my condo on occasion when I would go out of town, and was impressed with the rents I was able to command (especially in the summertime, which is gangbusters).

Oceanside is in the county of San Diego, but it’s outside the *city* of San Diego so it is fortunately not subject to the previously mentioned regulation as I understand it. There was some proposed state legislation from assemblywoman Tasha Boerner Horvath at one point that would have posed a threat to STRs in coastal San Diego *county*, but my understanding is there was question around the constitutionality of a state bill being targeted toward only a small part of the state. Last I read it didn’t gain much momentum and was therefore dropped. @Dan H. - I’m wondering if that’s what you were referring to in your post when you were suggesting against coastal San Diego county. Do you know of any news I don’t? 

My impression from attending a few city council meetings here in Oside is that the city of Oceanside wants to work with STR landlords because the TOT taxes are a big source of tax revenue here.

@Dan H.

@Sean Morrison - I just noticed @Klemens N. didn’t mention you in his last post so you may not have even noticed his reply to you. Do you agree with Klemens’ perspectives now after reading his explanations? I’m particularly interested to hear if/why you think there would be no liability protection from this structure? Also, why do you think that the tenants can likely pierce the corporate veil? 

Also, I recently started a separate thread that narrows in on the franchise tax topic: https://www.biggerpockets.com/... It would be great to hear your opinion on whether the franchise tax would be owed in the structure I describe there, which could perhaps be incorporated into Klemens’ structure here to improve the chances of him never seeing a franchise tax bill IMNLO ( in my non-lawyer opinion :)

thanks, Rob

@Jarrod Cook, where are you getting your information from? It is inconsistent with much of what I’ve read. For example, I’ve read that Google relies more heavily on the algorithms (i.e. automatic filtering) than Yelp does. Did you take a look at the link I included above to the harsh truths of google reviews? There are a few bulleted items in there that challenge your perspectives, such as your idea that Google goes after fake negative reviewers. I’ve also read that it’s much easier as a business to get a negative review manually removed by Yelp than it is by Google. I’m not saying what I’ve read, or the conclusions I’ve come to personally, are 100% accurate. Naturally though it makes me skeptical of your claims absent of any supporting data. 

My questions in the previous post were not meant rhetorically, nor the ones in the preceding paragraph here. If you’re declining my invitation to substantiate your claims by addressing those, I’m sad to say that speaks volumes.

Thanks for the quick reply @Jarrod Cook

In my opinion, it makes the integrity of their post more or less questionable. And personally I like the approach Yelp takes with this in mind.

Even though Yelp apparently filters such questionable reviews from its “recommended” reviews, it still allows users to view reviews that are not recommended. It doesn’t aggregate them into the same category to derive an overall rating, which I prefer. While I have to wonder if your bias as the company’s agent influences your opinion on this matter, I do acknowledge this is a matter of opinion rather than fact. And everyone else reading will have to formulate their own. do you have any thoughts though on why so many of your google reviews come from people with such few overall posts? I think an answer to this could help provide a better understanding.

The reason I wasn’t impressed by the data on your website was because there was no data. Take the quote you just copied from the article as an example- at best it offers a conclusion without the underlying data, and at worst it’s a misleading or altogether fabricated statement. My gut tells me it’s somewhere in between those extremes, but without the underlying data how am I to know? Saying something is “very true” doesn’t make it very true. It would be more compelling if you shared the reasons to believe it is very true.

Your article (which I linked to in my prior post) points out that Yelp’s ineffective algorithm is the source of multiple lawsuits. Google and Facebook also face lawsuits regarding their handling of reviews. Here’s just one quick example: https://www.abc.net.au/news/20... Do you have any data you can share to suggest the number of lawsuits against Yelp is inordinately higher than those filed against the others? Or better yet, do you have any data to suggest that Yelp has lost any more lawsuits than the others? I don’t claim to know the answers to either of these questions. Although, it’s interesting that a quick google search yielded this top result which provides data (i.e. court cases at the bottom) showing that Yelp has prevailed as a big winner in the lawsuits filed against them: https://blog.ericgoldman.org/a...

I’ve lost trust in BBB ever since investigative reporting exposed shady practices of theirs about a decade ago: https://abcnews.go.com/Blotter... Hopefully they have changed their ways since- do you have any data to show that is the case? 

I don’t claim to know anything about the validity of facebook reviews. Do you have data to show those are any more dependable than the rest?

Don’t get me wrong, I’m not trying to be an advocate of Yelp here. I’ve already mentioned it has its share of issues as well. However, I think a comparative examination against the other platforms is something you owe your prospective clients if you are going to imply they should dismiss Yelp reviews but not the others.  

@Jarrod Cook, I took your suggestion and did some research on Yelp with regard to property management services, and I didn't find anything to substantiate your suggestion. After much googling the only thing I found on the subject were words from your company’s webpage, e.g. https://specializeddallas.com/... And I don’t really find that to be a compelling article personally. I understand the point about the negative reviews from tenants on maintenance requests, and how they should be taken with a grain of salt. I don't see that as being a Yelp-specific problem though. Your company conversely takes pride in its high Google rating, and yet there isn't really an explanation to why the Google reviews are a closer reflection of reality than Yelp. So I turned the focus of my research to see what I could learn about the relative reliability of reviews between these two main platforms. Evidently both have their share of problems. My personal conclusion based on what I researched was that Yelp seems generally more reliable than Google. Here's an interesting page that highlights many of the shortcomings with Google reviews: https://www.localvisibilitysystem.com/2018/02/14/25-hard-truths-of-google-reviews/

Also, I noticed that a significant number of the Google reviews on Specialized Property Management, Specialized Property Management - Atlanta, and Specialized Property Management - Fort Worth are from folks who have written a total of 1 or 2 reviews on Google. And I learned this is a key distinction between Google and Yelp. From what I gather Google tends to allow these, whereas Yelp tends to filter them. I personally tend to agree with Yelp on this approach. When a review is the only one ever placed by a reviewer, it makes one wonder if they were incentivized for their review, or worse yet somehow affiliated with the company.

Will all that said, I'm sad to say I find this all to be fishier than it was to me before. However, I'm reserving judgment until you are able to shed more light on this issue. I hope you can be more specific than the obscure suggestion in your previous post- it now smells a bit like vague misdirection in an attempt to excuse the low Yelp rating your company has. I hope that's not the case, and I'll be glad to learn anything that gives me reason to believe otherwise.