All Forum Posts by: Account Closed

some of my clients, in a similar situation, went with a corporation (C corp, not an S) that owned a different LLC for each property. In your case the C corp would be CA, but the LLCs in the state where the property is, OR or wherever.

I find that there is not one right answer that is the best for everyone in every situation. It is a balance of priorities, such as ease of ownership, who pays the taxes and at what rate, liability protection, changing ownership interests, structural admin costs, etc. 

only a dozen or so states recognize a legal entity known as a series LLC. The Wikipedia article on them is informative.

The taxation of income created by foreign citizens in the US differs between countries. Here is a link to the tax agreement we have with Israel. 

@Daniel J., there are two issues. One is the taxation of specific assets on issues as depreciation, expenses and income. The other issue is who owns the asset. Real estate as an asset type can have advantages over other types of assets. Persons, as an owner type, are taxed differently than partnerships or corporations. 

Another issue of confusion could also be the difference between state and federal tax rules. Texas is in a league of its own on certain legal and tax issues. Advice on this website is typically federal in nature. 

LLCs can be pass through entities for federal income tax purposes, or they can elect to be taxed as an independent responsible taxpayer (like a corporation). 

@Jon Mason, you are always liable for your own actions. If you perform work on any property (whether you own it, an LLC you own owns it, someone unrelated to you owns it) and your work causes injury, you can be liable no matter who owns the property. If you work has nothing to do with the cause of the lawsuit, in most States, working on a property does not, by itself, pierce the veil.

In WA, if you work on a residence in which you are not the tenant, you have to be bonded, licensed and acquire all proper permits. 

A couple of questions you need to clarify:

1. who owns what? Does a legal entity own the real estate? Who owns those entities? 

2. When people add their funds into the mix, what do they receive? LLC units? A loan document to an LLC, guaranteed by primaries, or guaranteed only by real estate? If you are selling units of something (such as an LLC) backed by real estate, in some states you are selling something that State would consider a security and need registration (or meet an exception to registration).

You did specifically ask for an attorney in CO or OR, and I am neither as an attorney in WA. Just thought this might be helpful along the way. 

@Edward Mccracken, Quest has an account for your IRA that has a small interest rate. They do not offer the type of IRA that invests into an LLC that you control, which allows you to create accounts in the name of the LLC where you sign as the LLC manager. If you want accounts for your Quest IRA they need to be in the name of the IRA. Most, if not all, banks are not going to provide this because their IRA accounts are part of their custodial account system. If you want your qualified funds in a bank account then open an IRA with the bank. If you want a bank account for your IRA, meaning you can have local control, then you need the IRA-LLC model which Quest does not offer.

If you want to create an IRA-LLC, and need some help, give me a call. This will require a transfer to another custodian.

@Dean Boyer, I agree with @Natalie Kolodij about talking to a CPA. RE attorney could help, if they also have experience with creating legal entities. The way I look at ownership is not according to social security numbers but who are the legal owners on title. In Washington, sole proprietorships (SPs) are not legally different than the individual. You may have as many SPs as you want because they are all you. If you create an LLC, a Corp, a Partnership, etc, that entity should have its own tax ID from the IRS.

@Christopher Nerio, If the LLC owns the house as a business and you also live there, then you are a tenant as well. For the downstairs suite to be a tenant of the LLC you might need to split the title with yourself. I agree with @Scott Vance that the LLC is about liability but not helpful at tax time. However, for a house in which you live, if there are issues, I believe hiding behind State liability laws is not likely to work.Your best advisor on the tax points is the accountant / CPA who signs your tax returns. For the LLC legal issues see a Virginia attorney as these liability issues vary slightly state by state. 

@Kyle Allen, I highly recommend interviewing an account / CPA or two to discuss tax differences between the two. As for legal differences, if you use an LLC I recommend a manager managed rather than member managed (if your State makes that distinction). An LLP would minimize her liability in a more truly silent partner style, increases yours as the general partner. Some States recognize a family limited partnership which has some transfer benefits.

Some of the members on this website use retirement funds. Does not appear you are doing so given your post above, but please keep in mind that parents and kids are disqualified persons when it comes to qualified funds.