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Old 28-01-2024, 17:09   #16
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Re: CA specific question - LLC boat purchase

The reference is to a blog written by yacht brokers. They do not appear to be business brokers.

The author's wife is Leilani Wales and has a California Yacht and Ship Brokerage License (B-03422). The author, Mike Wales is a personal injury attorney.

In California, a broker who represents parties in the purchase and sale of a company or business opportunity must be licensed by the Department of Real Estate whereas, a California Yacht and Ship Broker’s license is required for the sale of a yacht.

They provide ZERO reference to California tax codes.

The sale of a business involves entirely different set of transaction documents than does a sale of a boat.

The LLC will come with its own set of liability exposures and liens, separate and apart from those associated with the boat.

The operating agreement, if any, of the LLC will determine the method of its sale and / or termination. If the LLC does not have an operating agreement then the State's law will default as to the operation of the LLC.
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Old 28-01-2024, 19:14   #17
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Re: CA specific question - LLC boat purchase

There are two parts to this sale as mentioned in my original post - the sale of the yacht and the sale of the LLC. I got some more info from the broker.

The LLC portion is going to be handled by an attorney via Denison Yachting, so not a small time group.

Every broker I've spoken with in CA says the same thing "LLC purchases save you sales tax, but you'll pay property tax" as the boat owner doesn't change and trigger tax. They seem to use it as a positive selling point because of the cost savings.

In this case this transaction takes my one time $20K+ sales tax away and replaces it with a roughly 1% property tax annually which is much easier to swallow but it doesn't ever go away.

I was hoping to clarify the difference between LLC asset ownership vs doing business, as someone said California likes to collect its annual $800 regardless of where the other LLC is based. I was hoping due to the fact of no registered income that I could avoid this, but I should have realized CA will always get its funds eventually.

Thanks for all your input.
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Old 28-01-2024, 19:45   #18
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Re: CA specific question - LLC boat purchase

You have to submit paperwork every year showing zero income for the LLC.
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Old 11-12-2024, 15:27   #19
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Re: CA specific question - LLC boat purchase

If you keep your boat in California, you pay property tax to the county the boat is berthed in, regardless if it's owned by an individual or an LLC. There's no getting around that that I'm aware of. California marinas report the boats that are berthed in them to their respective county.

My understanding is the main difference between LLC and individual:

LLC: $800/yr annual LLC fee
Individual: Up front sales/use tax paid the first year of purchase

CrispyCringle, you happy with your boat ownership LLC?
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Old 11-12-2024, 16:01   #20
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Re: CA specific question - LLC boat purchase

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Originally Posted by thuss View Post
If you keep your boat in California, you pay property tax to the county the boat is berthed in, regardless if it's owned by an individual or an LLC. There's no getting around that that I'm aware of. California marinas report the boats that are berthed in them to their respective county.

My understanding is the main difference between LLC and individual:

LLC: $800/yr annual LLC fee
Individual: Up front sales/use tax paid the first year of purchase

CrispyCringle, you happy with your boat ownership LLC?
Hi, yes no regrets. Annually, I pay, I think, 1.2 % of boat value tax to county. But only about $200 to maintain the LLC, and maybe another $100 to the LLC attorney that sends me a new updated LLC minutes each year. Id have to look at records to get exact figures, but I think thats pretty close.

Its confusing to the layman, but its a good deal on the sales tax. Saved me a couple of $10ks of boat bucks that can be better spent.
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Old 11-12-2024, 17:03   #21
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Re: CA specific question - LLC boat purchase

I'm a California resident and have a California S Corp. I'm no expert (that's why I have an accountant), but I will add my 2 cents.

1. Mentioned above is the 800.00 annually that California charges. Yes, this is true, but I'm pretty sure that only applies to California corporations, not to corporations outside of California

2. If your boat is in California, even in a Colorado LLC, you will pay property tax. After a certain amount of time of paying property tax, you may be required to register your boat in California, even though it's in the Colorado LLC.

3. Though putting assets in LLCs is pretty standard, LLCs are, in fact, business. If an LLC isn't generating any income, it could be viewed as lacking a legitimate business purpose, opening up many cans of worms. An LLC whose only purpose is that it owns a boat may be well scrutinized

While you can save money by doing what is mentioned above, and that's fine, I'm one of those people that has been hit with every freaking fine and action and doesn't seem to be able to get away with anything. So, I just pay what my accountant tells me to pay and in return, sleep like a baby at night.
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Old 11-12-2024, 17:36   #22
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Re: CA specific question - LLC boat purchase

Quote:
Originally Posted by Montanan View Post
In California, every LLC, wherever organized, is deemed to be “doing business” in California, if the LLC owns an asset based in California with a value of $50,000 or more. Thus, even a Delaware LLLC must pay the annual minimum franchise tax of $800 to the California franchise Tax Board every year.
That's interesting and sounds 100% correct. Even though the LLC is a Colorado LLC, The boat is located in California, California would require California LLC registration because the sale of the boat is actually taking place in California, so the Colorado LLC is doing business in California. Then, 800.00 per year (+ annual statement of information with SoS) + property tax... first born, etc.
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Old 12-12-2024, 00:35   #23
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Re: CA specific question - LLC boat purchase

Guess that’s the price you have to pay for year-round boating and no major storms.
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