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Old 03-05-2016, 06:45 AM   #1
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Montana LLC?

Anything new about the legality of the Montana LLC? Most of what I have read is pretty old. Live in FL, going FT this summer. New RV delivery in April. Considering the Montana LLC for ownership of the RV. Please let me know any recent news concerning them and experiences of those using the Montana LLC.
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Old 03-05-2016, 07:26 AM   #2
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Nothing has really changed as to the legality of the Montana LLC. If you are a full timer then the Montana LLC is more viable than it is for those who do not full time. A lot will depend on what state you choose to be your state of residency and what their laws are in regards to vehicle registration and sales tax accordingly.
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Old 03-05-2016, 07:38 AM   #3
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Since you will be fulltime, your state of residence is the most important thing. What do you gain from the LLC, avoid sales tax? But may take your insurance way up. Look at the Escapee' s site for full time and the consequences and convenience of each State, like drivers and coach licences, mail forwarding and medical insurance are just a few concerns for the full timer.

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Old 03-05-2016, 11:44 AM   #4
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Montana LLC's have always been legal and still are. The issue comes about if you still own a home somewhere else and are registered there for everything. Then it becomes questionable depending on your circumstances and your home state.

Getting others' answers, including mine, via the internet is not going to be the correct answer for you. You need to consult a lawyer in your residency state.
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Old 03-05-2016, 10:34 PM   #5
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I am a CPA and about to buy a new motorhome. I researched Montana corporations and LLC's. Corporations have to pay Montana $50 income tax every year. With LLC's filed as partnerships or sole proprietorships, the LLC activity has to be reported on your 1040 which means you have to file personal tax returns with Montana also. So I decided on a Montana business trust, which files it's own 1041 tax return with the IRS and Montana, totally tax free, and keeps you from personally filing state income tax returns with Montana plus whatever resident state you may file with. I rent my motorhome from the trust, and it deducts all related expenses, with close to zero net profit. And if I am questioned about not licensing the coach in my home state, I report that I am just renting it from a Montana RV rental company which is the business trust it is titled in. So I recommend setting up a Montana Business Trust rather than an LLC. It is the least costly and least troublesome.
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Old 03-06-2016, 06:41 AM   #6
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As a fellow CPA I am not sure that your logic is totally correct. First off, a single member LLC is a disregarded entity and does not have to be reported on a personal tax return unless it has business activity so I'm not sure where you may be coming to the conclusion that it would require filing of a Montana personal tax return. Second, and probably the most important, is that I think you are confusing income tax law with sales tax law. Renting from a self controlled entity in another state will not alleviate the requirement for licensing a vehicle in the state in which it is garaged. That is the kicker right there.

You need to research what the residency laws are of your state and the vehicle registration laws are for your state. Then you have to document your compliance with your state's laws. Using a Montana Business Trust is no different than using a Montana LLC from the perspective is sales tax laws and vehicle registrations. I wish you luck with your choice of entity to avoid the sales tax, but I've got a pretty good hunch that if you are in a state that is aggressive in pursuing taxes you will be paying some pretty hefty penalties and interest.
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Old 03-06-2016, 09:18 AM   #7
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I haven't seen any changes to the MT LLCs, but have read a few reports about some people being caught by their home states for avoiding high taxes and registration/title fees by using LLCs. You're already a FL resident and have one of the lowest tax burdens already, so why mess with a good thing.
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Old 03-06-2016, 11:22 AM   #8
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An LLC is a business and any activity will be business activity. So as a disregarded entity, you are required to file such activity on your 1040 Sch. C. I checked with Montana and having any Montana activity on your 1040 requires you to file a personal tax return with them too, even though there would be no tax. A trust avoids that as it files its own separate tax return with no connection to you, and no one owns a trust. I know about sales tax law and did not mention that aspect. And if I do not own the vehicle, then I cannot register it in any state--the LLC or the trust has to do that, and will register in its home state Montana. I am just the renter.

Personally I will soon be a fulltime RV resident and traveler with no home state and my RV will never be garaged anywhere. So this strategy may not work for the weekend camper.
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Old 03-06-2016, 01:09 PM   #9
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An LLC is a business and any activity will be business activity. So as a disregarded entity, you are required to file such activity on your 1040 Sch. C. I checked with Montana and having any Montana activity on your 1040 requires you to file a personal tax return with them too, even though there would be no tax. A trust avoids that as it files its own separate tax return with no connection to you, and no one owns a trust. I know about sales tax law and did not mention that aspect. And if I do not own the vehicle, then I cannot register it in any state--the LLC or the trust has to do that, and will register in its home state Montana. I am just the renter.

Personally I will soon be a fulltime RV resident and traveler with no home state and my RV will never be garaged anywhere. So this strategy may not work for the weekend camper.
Actually an LLC is not a business but an asset protection tool. We have used the LLC's to help protect various assets including personal residences from lawsuits. It is a common misconception that an LLC is a business just because of its title. I have been teaching the use of LLC's for over 20 years to other CPA's so I've become very familiar with them. The IRS refers to single member LLC's as disregarded entities or tax nothings so there is no filing required other than what may a registration filing within the state of organization unless the LLC has income.

If you are not full timing and are not using the Montana entity to avoid the sales tax then I'm not sure what purpose the entity would serve. Once someone full times then the Montana LLC or other entity can be valuable as a sales tax avoidance mechanism, but other than that I see no use for any Montana entity. If asset protection is the desire then an LLC in the state of residence would work.
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Old 03-06-2016, 01:15 PM   #10
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RV Vagabond, you stated ".........Personally I will soon be a fulltime RV resident and traveler with no home state and my RV will never be garaged anywhere.........". I'm a bit surprised you said that and I hope some other folks don't get the wrong idea about legal domicile. One simple rule to remember is you can only have one legal domicile, but you can have one or more residences, one of which could also be your domicile. While I appreciate that some full-timers want to be citizens at large, sooner or later a state you have visited or stayed in for some length of time might try to make you a resident, particularly for tax purposes, and you're going to have to jump thru some hoops to disprove the state's claim on you. If you've tried to hide your domicile by not registering to vote, having a driver's license and vehicles registered in different states, no doctors, not paying taxes if necessary, avoiding jury duty, etc., see how that works out for you.

I presume you have to file a federal income tax return and indicate from where it's filed, just like every other citizen. Unless you have figured out a way to hide your physical address within a shell company, here's an example of what could happen: while on active duty and stationed on and off in VA and filing my federal return with a VA address, I occasionally received communication from the VA commonwealth requesting that I file a VA tax return, unless I had an exemption, which I did as CT was my home of record (military term) unless I took some action to change it to VA.

If you use this and other RV forums for a while, or search for it, you'll find posts about some NY, MI, or other state resident who's used a Montana LLC for their RV, but parks their RV at their domicile most of the year, and has to pay considerable back taxes. I've personally known of cases where peoples' out of state license plates have been challenged when parked in another state for lengthy periods of time. All it takes is one dick neighbor to rat you out. Now, having said all that, I doubt it would be a fellow RV'er ratting anyone out.
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Old 03-06-2016, 01:46 PM   #11
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If you use this and other RV forums for a while, or search for it, you'll find posts about some NY, MI, or other state resident who's used a Montana LLC for their RV, but parks their RV at their domicile most of the year, and has to pay considerable back taxes. I've personally known of cases where peoples' out of state license plates have been challenged when parked in another state for lengthy periods of time. All it takes is one dick neighbor to rat you out.
The key here is that those who get fined for having a LLC are a state 'resident'.

Typical full-timers do not own a house so their RV is not 'garaged' anywhere. It's constantly traveling. A full-timer has to get registered someplace. That is when it's absolutely legal to have a Montana LLC for registration purposes.
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Old 03-06-2016, 02:28 PM   #12
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The key here is that those who get fined for having a LLC are a state 'resident'.

Typical full-timers do not own a house so their RV is not 'garaged' anywhere. It's constantly traveling. A full-timer has to get registered someplace. That is when it's absolutely legal to have a Montana LLC for registration purposes.
I agree that a Montana LLC has its place. The point of my post was that RV Vagabond stated he would soon be a full-timer and would have no home state and his vehicle would not be garaged anywhere, and that's essentially misleading. If he has really figured out a way to game the system, more power to him, but I doubt he has. I could come up with a few examples where a vehicle could be considered "garaged," and like it or not, he WILL have a home state, or domicile, somewhere. Many full-timers stop in one location for months on end and their vehicle(s) could be considered "garaged" at that one location by some states.

My point was and is, one really has to establish a domicile, remain connected to that domicile and use that domicile to disprove another state's challenge regarding residency (and, ultimately domicile), if challenged.

It's relatively easy to adopt a state's domicile, particularly in SD, TX and FL, rather than being hard-headed by insisting "I don't live anywhere." In those three states, one affirmatively abandons their prior domicile, gets an address in the new state, registers to vote, possibly titles and registers their vehicles there, get a driver's license there, etc. Once having all that, there's little required of those states if you don't want to return for any length of time. You might get, for example, a jury summons in FL, and if you're out of state, you can get deferred for the next six months. Again, it's relatively easy to do the right thing and prevent some serious and potentially costly mistakes down the road.
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Old 03-06-2016, 04:13 PM   #13
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After reading all of this i'm glad I paid the sales tax!
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Old 03-07-2016, 07:13 AM   #14
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After reading all of this i'm glad I paid the sales tax!

Yep, sometimes it's just easier to pay the darn tax and forget about it. Hey, at least you can take a federal deduction for the sales tax and get part of it back from the feds.
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