Buying a boat in an LLC

[CSY Man]

. I wouldn't by a boat in an llc unless I knew I wasn't going to resell, knew it was not heavily depreciated(unlikely) and wasn't going to charter. My 2 bits.

Now I am really confused, too many negatives make a positive?
Would buy in an LLC if you were not going to charter?

[CalmSeasQuest]

Talk to a tax professional familiar with your venue. My tax attorney strongly suggests using an LLC. Not only for some liability protection and potential sales tax savings but; if you still own the boat (or technically own the LLC that owns the boat), it provides additional advantages upon death regarding taxes and avoidance of probate.

[captainstubbie]

Well put 14murs14. They would buy the shares of stick in the llc, not the boat...so boat ownership doesn't change. Tax adv or disadv possible for both sides...depending on several tbings...

[captainstubbie]

Stock

[denverd0n]

Originally Posted by S/V Illusion

Corrolary to #2 - this forum is full of devious boating advice.

Devious, and in a lot of cases just plain wrong! I would be talking to an attorney who is experienced in these matters, not a bunch of strangers on an internet forum.

Internet legal advice is worth exactly what you pay for it -- NOTHING!

[Pebbs2200]

Thanks everyone!

[Scot McPherson]

buy the boat...if you want to put it into an LLC, you are better doing it on your own. Without hiring an investigator, you really will not know what you are buying when you buy a company. It's called Due Diligence....do your Due Diligence...or just buy the boat and start your OWN LLC, that you know is in the free and clear if that's what you want to do.

[Tom_F]

If you're serious about keeping this in an LLC, you really need to consult with a California lawyer about this. I'm NOT a CA lawyer and you're not a client and we are not establishing an attorney-client relationship by this communication (sorry, I have to include that disclaimer even though I think it comes across as somewhat obnoxious), so this is just general observation and advice, but in most states whether you are shielded by the limited liability afforded to an LLC may determine whether your LLC is adequately capitalized. In addition, there are usually additional hoops you need to jump through so that you keep your personal affairs separate from your LLC's affairs. For example, CA may require that the LLC pay all of the maintenance and non-operating expenses for the boat, so all improvements, maintenance, equipment replacements, etc. may require you to first make a capital contribution to the LLC and then have the LLC pay the costs out of its funds and its own separate bank account. That also means you likely need to pay the operating costs out of your pocket and not from the LLC's funds. If you pay your local chandlery by personal credit card and not a credit card issued to the LLC more that just rarely for non-operating expenses, you may not get the liability limitations you think. Plus, again to keep your affairs separate from the LLC's, you may need a bareboat or other charter agreement in place. Is that worth the savings? I guess it depends on your financial situation and whether CA will nail you for the sales tax anyway when you change the address on the registration.

You really need to get advice from a qualified lawyer or other professional licensed in CA. Good luck!

Tom

[CSY Man]

Originally Posted by Scot McPherson

buy the boat...if you want to put it into an LLC, you are better doing it on your own. Without hiring an investigator, you really will not know what you are buying when you buy a company. It's called Due Diligence....do your Due Diligence...or just buy the boat and start your OWN LLC, that you know is in the free and clear if that's what you want to do.

Yeah, but then you loose the sales tax savings

[marty9876]

I had this option, was recommended not too as your getting what depreciation they had already taken.

[Kenomac]

Originally Posted by nematon785

Who told you a LLC pays lower sales tax than anyone else? why $800 in fees to register? why incorporate in CALIFORNIA of all GAWD forsaken places!!! who are you talking to? moving on...

I don't know anything, but I know my business runs out of Delaware, not California.

If one lives in California, there isn't a choice. Form an LLC or pay the tax. California doesn't care where you document the boat, as far as the state is concerned, if it's in Cali you owe Cali.

[jmschmidt]

You can set up an LLC to own your boat in any state you want and paint any hailing port on the stern you want. All owners of the LLC must be US citizens if it's a US flag vessel. I assume it is US flag. You may or may not beat the California tax collectors if you are a California resident. If the boat never enters California you are in a better position tax wise, maybe. Don't use a California LLC for anything. Use Nevada, Wyoming, Alaska or Hawaii. In fact don't even live in California, my son is moving himself, his girlfriend and his two boats to Texas. Get out now before they pass a law against leaving the state.

[nextis12]

Originally Posted by marty9876

I had this option, was recommended not too as your getting what depreciation they had already taken.

You should'ent lose out on any depreciation. Assuming it's a charter business your deperciable basis would be based on what you paid for the LLC, the amount paid would be allocated to the boat and depreciated.

If for pleasure then the amount paid to buy the LLC would be your basis, if sold for more then what you paid you would have a gain. But who sells a boat for more then originally paid???

f you buy the LLC and not the boat, then there is no sales tax, strikes me as a good idea. In CA you would have to pay $800 a year for the LLC, so depending on the sales tax amount maybe not...?

[Pebbs2200]

Thank you all for your input. We're looking at the pros and cons and of course we'll be talking to an attorney and an accountant. We had never heard of this and I'm glad we asked y'all.

[captainstubbie]

Good luck! Fair winds!!