Kims

I don't see any disadvantages except for maybe a little paperwork. I live in NV and guess I'm lucky. I have also understood that I can keep the Inc in NV if I move, just get a local business license and do a charter or two pr. year...

Chris Sunkin

Incorporating solely for the purpose of insulation from litigation oesn't work. There's no restriction from doing it, but no judge will buy it. Unless there are some other activities occuring inside the corp., you may as well not bother.

excalibur32

I believe INC were developed to insulate company's from acts their employees do, the company is in good faith the employee is the bad guy, the law is the law, the IRS is the one to spank you if you were to have deductions. He could form an LLC and put his boat in it and just run an internet company giving advice to boaters!!!!!!!!!!!!

Kims

You normally give very good and sound advice on here, but can you REALLY speak for all judges?

Chris Sunkin

That's absolutely true, corporations insulate their employees and shareholders from most civil litigation. There are instances where it does not- and that's for legitimate corps. If you set one up and all it does is provide you a shield, then it's not a legitimate corporation. Now, you could set up an operating, revenue generating corporation to lease the boat to yourself but that doesn't protect you as the operator as the corp can't lease the boast to itself. You could hire yourself as captain and see protection but if you have no revenue-generating activities nor a reasonable effort to produce revenues, you're going to have your protections invalidated. No, charging your pals and kids a buck a day for rides won't work.

As in your example, running a website advising boaters would be legitimate if there was a reasonable connection between the boat and the purposes of the company. But again, we go back to the core business generating revenues. If you were to establish the corp as a 501(c)(3) non-profit and made the case it's your philanthropic interest driving the entity, you might slide. The time, effort and expense, plus actually having to operate the non-profit legitimately would outweigh the benefits dramatically.

In the end, most people who have incorporated have done so in tax-free states in an effort to avoid taxes in their home states. The corporation then is a legal resident of that state and entitled to operate in that state in accordance with its laws. That doesn't prevent the state of your actual residence from enacting and enforcing its own laws governing the possession and use of out-of-state property inside of its borders.

Chris Sunkin

No, I certainly can't.

Maybe I missed a word in there- no REASONABLE judge. You never know for certain what any one judge (or human) might do. I feel pretty confident in saying that no court of appeals would allow it to stand.

But I do know how the laws read and that usually guides how judges handle black-letter law.

I've pierced two phony corporations myself. It took about a hour of legwork and about 5 minutes before a judge both times. I had a 3rd corporation's corporate shield defense invalidated simply because he moved across the street and didn't change the address on his corporate filing. The secretary of state willingly provided documentation that the entity held no valid corporation in the state.

You should speak to a GOOD attorney in your state before doing any of this. Setting up a corporation without one is foolish, a waste of time, and may hurt your position if you ever do end up in court. Judges are practical people with busy schedules. The majority are very committed to the law. When they get someone in front of them who's trying to "get cute" with a dodge like this, it can be very damaging to that individual's position. Not only will you most likely see your shield invalidated, you've now lost any benefit-of-the-doubt you might have had with that judge through the rest of the proceeding.

In the end,if it was as easy as paying a couple hundred dollars for a piece of paper from your state, the courtrooms would be empty, there would be way fewer insurance companies and 300 million Americans would be corporate entities.

TexomaPowerboater

I don't see any advantages of doing this. Anybody that does form an LLC just to jointly own a boat and get business deductions is playing russian roulette with the IRS. Quick phukin around and just buy the boat like everyone else. Trust me if it would work - I would have already done it. My whole family is tax accountants and we love boating - so if there is any kind of an advantage we would have already found it. Don't listen to lawyers - they don't know chit about the tax code. Most only know just enough to get themselves in trouble.

An LLC will not be recognized by the IRS for mere joint ownership of a boat or a house. Yes you could probobly set it up, but when the IRS catches wind of it - it will all be treated as personal property and you will owe a boatload of back taxes.

excalibur32

The get a good LAWYER is the way to go, I doubt good lawyers have the time to dispense opinions here, you will have to make an appointment!!!

VetteLT193

Unless something has changed:

You can set up a Sub Chapter S Corporation and buy a boat through that. The corporate shield can be broken by any decent attorney, so the liability is still there BUT when you sell the boat, you sell the whole company with the boat as part of it and the next buyer pays no sales tax. Bottom line is your boat holds it's value better...

Chris Sunkin

Phknlwyr and klaw are on here all the time.

I'll disagree slightly with Texoma but MANY lawyers don't understand some of the financial and tax liabilities associated with corporations. If you find a good, midsized firm they should have a tax guy on staff.

As far as lawyers- I've wasted some time and money with a few and taught several others more about law that they learned in law school (or maybe it just seemed like it) but I've also run across a few who were both brilliant and highly ethical. They're out there- the trick is finding one.