Best state to form a LLC?

[Bob111]

Quote from Pekelo:

Well, I would actually make the payroll small. Since the family expenses are paid mostly by the company, the salaries are needed in case of audit and maybe for paying social security.

One of the biggest write off/expense could be if the building where the office is, is also the family house. Let's say one floor is the office, the other is for the family. The family could rent it from the company for some ridiculously small amount and such.

I am not planning to do it, I just like a mental challenge.

I don't see why a small company couldn't own 2-3 cars, well maybe we need 2 properties and transportation is also included in the benefits....Or we have to have some kind of clientele, even if small just to justify the cars...

Vegas vacation? Just save the ticket from the Traders Expo....

i think this type of scheme would likely work for something like a real estate,plumber or carpenter(at least partially),but again-you have to maintain all the records and they all must be reasonable(like going to check the property for example or collect payment or to fix something on the property) and if IRS comes-you have to convince them that the cars you are deduct or write off for example are 100% used for business. same with desk for example. it's must be used for business and business only. if there is a possibility,yes-possibility(!) that your son or daughter is going to use this desk to do the home work-you fucked..read few books on deductions and running small business in general,there is a plenty of them online.
but same scheme for trading?don't think so. you cant' deduct 100% of your internet expenses,if there is another PC in the house. same with phone and so on..the sad part that IRS will come and fuck you up hard over few bucks,accusing in all sort of shit and at same time big companies like google or whatever pays close to nothing on their humongous profits..

 

[Cache Landing]

Quote from PocketChange:

Have you investigated Series LLC's?

IRS Form 8832 is optional and only required if the Foreign LLC elects to be taxed as a disregarded entity.

Form 5471 is the key... You want your entity to operate tax deferred until distribution or liquidation.

Form 5471 is similar in some respects to the information return for a partnership, an S corporation or a trust. Unlike a regular C corporation, the income of a foreign corporation may be either taxed to the shareholders or tax deferred until there is a distribution or a liquidation.

Yes I have investigated the topics mentioned. Your argument in favor of form 5471 is in direct conflict with your earlier statements of the IRS ignorance of offshore LLC ownership identity. Earlier you argued that the benefit of the offshore LLC is that ownership is not recorded and therefore the IRS only knows what you want them to know. You are now arguing in favor of form 5471, which has the sole purpose of identifying owners of foreign companies and supplying that info to the IRS. The origins of form 5471 were in response to the IRS realizing that US citizens were doing exactly what you are proposing. 5471 was intended to stop it.

Indeed, 5471 allows certain income of foreign company owners to remain tax deferred until repatriation. But it doesn't sound like you are aware of subpart F income. In your example you referred to the sale of US real estate that produces a net gain after many years. This is considered subpart F income which the IRS states applies to "net gains from sales of property that do not generate active income". All subpart F income is taxable in the year it was acquired proportionate to the US citizen's ownership amount in the company.

In a nutshell, the series LLC can help protect you from certain liabilities, especially if you are trying to defraud a creditor. But the IRS has long since figured out how to get their desired tax collection from these entities. The form 5471 is your enemy, not your friend. It is the requirement that the g-ment invented to stop you from being able to do what you are proposing. Sounds to me like your lawyer is telling you what you want to hear so that you'll pay for services.

I should also mention that for these exact reasons, most banks will not lend to an offshore LLC without the managing member signing as a person guarantor of the loan.

 

[PocketChange]

I'm just stating if you intend to repatraite funds in your own name Form 5471 is the key. If you use series LLC's to hold investments in the foreign LLC you are not personally required to file the 5471. The IRS only receives the information you report... hence, the honor system. The foreign entities are disposable instruments... churn and burn. Many foreigners and immigrants hold shares and property abroad unreported with no intention to repatriate.

Quote from Cache Landing:

Yes I have investigated the topics mentioned. Your argument in favor of form 5471 is in direct conflict with your earlier statements of the IRS ignorance of offshore LLC ownership identity. Earlier you argued that the benefit of the offshore LLC is that ownership is not recorded and therefore the IRS only knows what you want them to know. You are now arguing in favor of form 5471, which has the sole purpose of identifying owners of foreign companies and supplying that info to the IRS. The origins of form 5471 were in response to the IRS realizing that US citizens were doing exactly what you are proposing. 5471 was intended to stop it.

Indeed, 5471 allows certain income of foreign company owners to remain tax deferred until repatriation. But it doesn't sound like you are aware of subpart F income. In your example you referred to the sale of US real estate that produces a net gain after many years. This is considered subpart F income which the IRS states applies to "net gains from sales of property that do not generate active income". All subpart F income is taxable in the year it was acquired proportionate to the US citizen's ownership amount in the company.

In a nutshell, the series LLC can help protect you from certain liabilities, especially if you are trying to defraud a creditor. But the IRS has long since figured out how to get their desired tax collection from these entities. The form 5471 is your enemy, not your friend. It is the requirement that the g-ment invented to stop you from being able to do what you are proposing. Sounds to me like your lawyer is telling you what you want to hear so that you'll pay for services.

I should also mention that for these exact reasons, most banks will not lend to an offshore LLC without the managing member signing as a person guarantor of the loan.

 

[millridge]

Quote from EMRGLOBAL:

Texas is a great state for an LLC.

I formed my LLC but I live and have my main office out of Texas.

The fee was $400 to file the articles of incorporation.

Be sure to review which style of "Incorporation" works for you. LLC, C corp, LP. etc. as a trader, as I'm not sure the rules. I would imagine they are not much different.

Make sure you understand the Pass through Tax advantage and that you are up to date on the new IRS code. Some things have changed for 2011, including taxation for Health Care.

Texas LLC filing fee $300

 

[Cache Landing]

Quote from PocketChange:

I'm just stating if you intend to repatraite funds in your own name Form 5471 is the key. If you use series LLC's to hold investments in the foreign LLC you are not personally required to file the 5471. The IRS only receives the information you report... hence, the honor system. The foreign entities are disposable instruments... churn and burn. Many foreigners and immigrants hold shares and property abroad unreported with no intention to repatriate.

I see what you are getting at. The problem is that TECHNICALLY it is tax evasion and morally reprehensible imo. But as long as it doesn't keep you up at night.

 

[PocketChange]

Technically it is a complex issue:

These fictitious entities can only be represented by licensed attorneys in any US court of law. As an individual you act in good faith relying on the financial statements produced by your CPA and the legal opinions and advice of your attorney. Tax avoidance and Tax mitigation is not a crime.

Quote from Cache Landing:

I see what you are getting at. The problem is that TECHNICALLY it is tax evasion and morally reprehensible imo. But as long as it doesn't keep you up at night.

 

[Cache Landing]

Quote from PocketChange:

As an individual you act in good faith relying on the financial statements produced by your CPA and the legal opinions and advice of your attorney. Tax avoidance and Tax mitigation is not a crime.

The issue is only complex to those who are bent on getting out of paying the clearly required tax. I disagree with the idea that what the IRS is doing is right, but it is still the law and is as clear as can be expected.

Yes, tax avoidance is legal but you are expressly condoning fictitious companies, overstated asset valuation, and consciously omitted ownership identification. You're talking about evasion not avoidance and then using the professionals as scapegoats. But that argument has never saved anyone from jail time for tax evasion. Just remember that.

 

[Free Thinker]

Quote from PocketChange:

I'm just stating if you intend to repatraite funds in your own name Form 5471 is the key. If you use series LLC's to hold investments in the foreign LLC you are not personally required to file the 5471. The IRS only receives the information you report... hence, the honor system. The foreign entities are disposable instruments... churn and burn. Many foreigners and immigrants hold shares and property abroad unreported with no intention to repatriate.

every 1040 form asks this question. do you have an interest in a foreign corporaton? yes or no. check no and you just lied to the irs. check yes and they want the details. what are you going to choose?

 

[PocketChange]

Check Yes only if in my name.

I'm missing something here...

If you are a shareholder of Microsoft and Microsoft owns and controls Microsoft Ltd India. You certainly would not be required to disclose or include any of the additional IRS informational forms with your personal filings. As a shareholder you are not liable for any crimes or fraud Microsoft may commit. As an officer you would have indemnity and Microsoft would be liable to pay your legal fees, fines and penalties.

If your a GM worker in Detroit with Stock you would not be required to disclose or fill out IRS forms for each GM venture in China or investment abroad.

If you own interest in a time share or a condo in Cancun that has a property manager renting it out when not in use and either applying the proceeds to principal or giving you a wad of cash when you vacation what are you going to report?

You have a sweep account setup with your bank to move your cash to another bank in the Caymans for overnight interest. This sweep is setup and managed by your banker and you report the interest income on your tax returns. The bank issues you a 1099-I and you are not required to disclose the exact sweep account number and bank the funds transfer in and out of.

My point is to create and use these entities to shield personal liability and to take advantage of any tax benefits you can derive. Hoarding Tax Deferred cash is not a bad thing... especially if you an put it to use in a compounding way.

Quote from Free Thinker:

every 1040 form asks this question. do you have an interest in a foreign corporaton? yes or no. check no and you just lied to the irs. check yes and they want the details. what are you going to choose?

 

[Free Thinker]

Quote from PocketChange:

Check Yes only if in my name.

I'm missing something here...

If you are a shareholder of Microsoft and Microsoft owns and controls Microsoft Ltd India. You certainly would not be required to disclose or include any of the additional IRS informational forms with your personal filings. As a shareholder you are not liable for any crimes or fraud Microsoft may commit. As an officer you would have indemnity and Microsoft would be liable to pay your legal fees, fines and penalties.

If your a GM worker in Detroit with Stock you would not be required to disclose or fill out IRS forms for each GM venture in China or investment abroad.

If you own interest in a time share or a condo in Cancun that has a property manager renting it out when not in use and either applying the proceeds to principal or giving you a wad of cash when you vacation what are you going to report?

You have a sweep account setup with your bank to move your cash to another bank in the Caymans for overnight interest. This sweep is setup and managed by your banker and you report the interest income on your tax returns. The bank issues you a 1099-I and you are not required to disclose the exact sweep account number and bank the funds transfer in and out of.

My point is to create and use these entities to shield personal liability and to take advantage of any tax benefits you can derive. Hoarding Tax Deferred cash is not a bad thing... especially if you an put it to use in a compounding way.

Line 7a. Check the "Yes" box on line 7a if either (1) or (2) below applies.

You own more than 50% of the stock in any corporation that owns one or more foreign bank accounts.


At any time during 2009 you had an interest in or signature or other authority over a financial account in a foreign country (such as a bank account, securities account, or other financial account).

If you checked the "Yes" box on line 7a, file Form TD F 90-22.1 by June 30, 2010, with the Department of the Treasury at the address shown on that form. Do not attach it to Form 1040.

CAUTION: If you are required to file Form TD F 90-22.1 but do not do so, you may have to pay a penalty of up to $10,000 (more in some cases).