Why Not Nevada Corps Or LLC's?
Dear List,
If one forms a corporation or LLC in Nevada (a state that has no corporation taxes) -- can one then use that corporation/LLC to buy and sell real estate in a different state and avoid that different state's corporate taxes?
I assume the answer is no (or else every corporation in the world would be based in Nevada). But can someone tell me *why* the answer is no?
Thanks.
Bob
Bob. I am not a lawyer but I have spent a fair bit of time on this.
1) If you are doing business in a state where you are not incorporated, you will generally be expected to file as a "foreign" corporation. (ie. if your rental revenues are being generated in Florida, your Nevada corp registers as a Foreign Corp. in Fl.
Your real concern should be on the asset protection side. I believe that in real estate issues you are particularly vulnerable to local (eg FL ) real estate law. There are many good books & courses on this but where I believe you are going to want to end up is:
a) Family limited partnership controls a Nevada or Wyoming LLC.
b) That LLC controls a LLC that is incorporated in the state were your rental property is (eg FL Corp in this example.) Another variation is to have the rental property in a Land Trust with a LLC as the beneficiary. Strongly suggest you get professional advice on these structures and what fits with your personal circumstances. The cost of the first one may be high but hopefully it leads to a "cookie-cutter" approach that makes sense for you. Good Luck
Your post raises a couple of issues I see quickly and want to comment on.
First, what is "Doing Business"?
Second, what does NV Corp/LLC offer in general that's differentand distinct from other 49?
First addressing DB issue:
Every state has its own law, both by stature and case decision about what's been found to be law in that state. So local lawyer would be needed to research and tell you what your state says about DB.
In many states, owning and renting RE is NOT DB! It's amazing what is not DB, and just because an out of state does a little bit of business in that state is NOT necessarily DB by its laws.
Second, NV is famous (notorious, maybe, if you're a tax man) for its proud refusal to cooperate with the IRA in info-sharing.
I just last week was looking at the main IRS website and saw a comment from the IRS bragging about an agreement iRS had reached with about 33 states, so far, in info sharing agreement...and prominently missing was NV.
My guess is, knowing its past stance, they'll be forever missing, or at least one of the last to sign up.
But of course, unless one is a crook, and trying to hide income, no such info sharing would really hurt, except to result in questions from the state where the RE is. And maybe a tax bill at that time.
Your post raises a couple of issues I see quickly and want to comment on.
First, what is "Doing Business"?
Second, what does NV Corp/LLC offer in general that's differentand distinct from other 49?
First addressing DB issue:
Every state has its own law, both by stature and case decision about what's been found to be law in that state. So local lawyer would be needed to research and tell you what your state says about DB.
In many states, owning and renting RE is NOT DB! It's amazing what is not DB, and just because an out of state does a little bit of business in that state is NOT necessarily DB by its laws.
Second, NV is famous (notorious, maybe, if you're a tax man) for its proud refusal to cooperate with the IRA in info-sharing.
I just last week was looking at the main IRS website and saw a comment from the IRS bragging about an agreement iRS had reached with about 33 states, so far, in info sharing agreement...and prominently missing was NV.
My guess is, knowing its past stance, they'll be forever missing, or at least one of the last to sign up.
But of course, unless one is a crook, and trying to hide income, no such info sharing would really hurt, except to result in questions from the state where the RE is. And maybe a tax bill at that time.
If you are concidering inc/llc get a cpa...discuss the tax issues and such...
one thing to look at ...if you are not a resident of the state..lets say Ca. and you want a Nv. corp. to do biz in Ca. you also have to register as a foreign corp ding biz in your own state...added fees,etc.....so talk to your cpa.... if you dont have one get one.....
Quote:
On 2003-09-27 14:25, BobSmith32 wrote:
Dear List,
If one forms a corporation or LLC in Nevada (a state that has no corporation taxes) -- can one then use that corporation/LLC to buy and sell real estate in a different state and avoid that different state's corporate taxes?
I assume the answer is no (or else every corporation in the world would be based in Nevada). But can someone tell me *why* the answer is no?
Thanks.
Bob