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-   -   Buying a boat in an LLC (https://www.cruisersforum.com/forums/f128/buying-a-boat-in-an-llc-184274.html)

marlin driver 11-05-2017 15:14

Re: Buying a boat in an LLC
 
Quote:

Originally Posted by nematon785 (Post 2389621)
A couple more quick question: Why incorporate in California? What is the benefit to basing your business out of California? I only ask because I would be tempted to incorporate in a location that is more beneficial to a LLC, and I will admit, its been a while since I checked but it seems Delaware is notoriously good location for this. It is clear I don't know jack squat, and now we can all learn (if you are willing to explain the methods)

Is there a reason why one would choose to buy a California based LLC rather than accept possession offshore and maintain the vessel home port in a State that would be more beneficial and register with the USCG rather than a state? Or even in Langkawi as opposed to the USCG?

Clearly Sales tax is a big concern. Any suggestions on how to protect myself and or my LLC if sales tax is demanded and questions come up from a taxing authority? Simply refuse? or do I need to hire a lawyer (or does my LLC hire a lawyer?)

At what price point does it become worth wile to add this complexity? Obviously 300K and up gives a large tax savings, and most at this price point would have additional assets worth protecting, so at 100k, the boat is my home, I have nothing else asset wise, is it still worth it? What about 50k?:confused:

For lower priced boats, it makes less sense. The cost to maintain an LLC in California is probably $2K-$3K per year by the time you pay to have the tax return prepared (yes there is a separate return) and pay the state fees. You do the math and decide if its worth it. If the boat you want is already in an LLC, you can buy it that way, avoid the sales tax, and eventually dissolve the LLC. Consult with an expert if you do this, since the tax man frowns on tax avoidance and may have something the say if they feel the whole maneuver was solely to avoid tax. Some buyers will let some time pass before dissolving the LLC, so that the sale and the dissolution are not closely associated.

I hope this suggestion doesn't start another wave of comments. My purpose in mentioning this is to give you something to discuss with your tax expert. No one here knows enough about your situation to give you specific advice that is valid.

marlin driver 11-05-2017 15:20

Re: Buying a boat in an LLC
 
Quote:

Originally Posted by 14murs14 (Post 2391066)
He understand that, the word "liability" just has two meanings in this context. Leboyd is talking about your liability to claims against the LLC, for example the LLC could owe someone money, and if you took over the LLC then you'd also take over that liability. I'd maintain that the risk of this is almost nil, but it is a risk. And keep in mind this liability will never exceed the value of the assets in the LLC, in this case the boat.
When you're thinking of "liability" you're probably thinking that the LLC shields the owners from liability around anything that happens with the boat beyond the value of the boat itself. This is also true to an extent, but this thread isn't about that. The thread is about the fact that you can avoid paying sales tax when you buy an LLC that owns a boat as opposed to buying the boat itself, that is all.
You can get the limited liability of an LLC just as easily by setting one up to buy the boat as by buying a boat already in an LLC, but that's not the point of the OPs question and I think many are confused on that point.

You and I agree. I only mentioned liability protection to recognize that some may find value in that. The only part of the LLC boat purchase that I value is the avoidance of sales/use tax. I agree the liability protection of an LLC is minimal in this context. Appropriate insurance is still necessary and provides more comprehensive protection.

leboyd 11-05-2017 16:20

Re: Buying a boat in an LLC
 
Quote:

Originally Posted by 14murs14 (Post 2391066)
He understand that, the word "liability" just has two meanings in this context. Leboyd is talking about your liability to claims against the LLC, for example the LLC could owe someone money, and if you took over the LLC then you'd also take over that liability.

Correct.

Captain Bligh 31-07-2020 16:37

Re: Buying a boat in an LLC
 
I dont think I have read a thread on CF (or really any other forum) that has so many ill informed answers.

bradfordharley 31-07-2020 18:19

Re: Buying a boat in an LLC
 
True, but why reply to a thread that died almost 2 years ago?

Captain Bligh 31-07-2020 20:20

Re: Buying a boat in an LLC
 
I have been research ing the subject. Bump.
Quote:

Originally Posted by bradfordharley (Post 3198885)
True, but why reply to a thread that died almost 2 years ago?



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