Montana LLC's, a Heads Up

[Brigadoon]

I agree with wnytaxman. If I was in the 35% tax bracket, I would certainly welcome a 10% flat tax rate.

If I recall correctly, when the flat tax rate was first mentioned, they were quoting an 11% flat tax as being a rate that should do the job. However, in the intervening years that has gone up. The last time I read something about it, it was questionable if a 20% flat tax would cover the bases.

In my case, I paid about 13% in taxes after all of my deductions, so any flat tax in excess of 13% would cause my taxes to go up. We would need to be carefull when making changes to the tax code.

[JimM68]

Originally Posted by wnytaxman

First off Perry an LLC is not a corporation and its treatment is different for both tax and legal purposes. .

All righty then. I am beginning to doubt that you are who you say you are.

A "limited liability Corporation" is a separate legal entity, just as a "C Corp" or an "S Corp" is. In fact the only real difference between an LLC and an S corp is that an S corp must be closely held, as in by members of the same family, where an LLC does not have this restriction.

As an example, If I choose to do an employee ownership thing with my main company (an S corp) I would have to file a resolution and change my company to an LLC.

Most Law firms are LLC's.

Most accounting firms are LLC's.

Most doctors offices are LLC's

Your statement is both absurd and totally wrong.

[JimM68]

Originally Posted by wnytaxman

Perry, aircraft are not licensed on a state level, but on a federal level. It is my understanding, and I may be wrong, that most states do not subject aircraft to sales tax because of the interstate commerce issues..

WHAT?

Sorry... aircraft a "monitored" on a federal level, just as interstate trucking is. Rules and regulation governing usage and maintenance and record keeping.

Both Aircraft and trucks are property, and are taxed and licensed as such on a state level. And most are owned by LLC's for various reasons involving the legitimate pursuit of business...

Now I'm really wondering.

[billsmax]

wnytaxman,
Aren't you glad JimM68 is such a legal and tax expert. Now we can all go to him for "expert" legal advise.
Just goes to show, a little knowledge can be a dangerous thing.

I compliment you on your restraint in responding to his comments

[wnytaxman]

Originally Posted by JimM68

All righty then. I am beginning to doubt that you are who you say you are.

A "limited liability Corporation" is a separate legal entity, just as a "C Corp" or an "S Corp" is. In fact the only real difference between an LLC and an S corp is that an S corp must be closely held, as in by members of the same family, where an LLC does not have this restriction.

As an example, If I choose to do an employee ownership thing with my main company (an S corp) I would have to file a resolution and change my company to an LLC.

Most Law firms are LLC's.

Most accounting firms are LLC's.

Most doctors offices are LLC's

Your statement is both absurd and totally wrong.

Jim, I appreciate your observations but your interpretation is somewhat convoluted. An LLC is by definition a Limited Liability Company which is separate and distinct from a corporation. A member of an LLC can not legally draw a paycheck, but an active member of a corporation must draw a paycheck. There are very distinct differences between the two entities. A single member LLC is, by definition, a disregarded entity, and has no TAX distinction from a sole proprietorship. A partnership that is an LLC also has no TAX distinction from a general partnership. Both entities have legal distinctions from a general proprietorship and a general partnership and those distinctions relate to the legal liability of the owners.

If you would like more information on the distinctions, I would be happy to have you attend one of my seminars that are presented to other CPA's throughout the US. The title of the course is "Comparing and Contrasting Business Entity Choices" and I'm sure you will find it helpful. I have been teaching that and other tax seminars to help other CPA's meet their continuing education requirements for state licensing purposes. I have been teaching those seminars for just about 20 years. My seminar schedule this year will take me from Manchester, New Hampshire to Fargo, North Dakota, to Raleigh, North Carolina. Perhaps one of those locations may be near to you.

[wnytaxman]

Originally Posted by JimM68

WHAT?

Sorry... aircraft a "monitored" on a federal level, just as interstate trucking is. Rules and regulation governing usage and maintenance and record keeping.

Both Aircraft and trucks are property, and are taxed and licensed as such on a state level. And most are owned by LLC's for various reasons involving the legitimate pursuit of business...

Now I'm really wondering.

Jim, I do not claim to be an expert on aircraft as none of my clients own their own planes. I can tell you that many states, including NY, do not subject semi tractors and other heavy trucks to sales tax because of their involvement in interstate commerce.

My reason for starting this thread is that it could save someone who is purchasing or who has purchased an RV some dollars and some aggravation. If you disagree with me, that is certainly your perogative and I wish you well. Anyone can get a Montana LLC and totally disregard their own states requirements to legally use the LLC. Maybe they don't get caught or maybe they do. Maybe they have a situation like my client is in where he complied with the law but can't prove his compliance. Either way I wanted my fellow RVers to know there are some pitfalls with the Montana LLC and, if you do use one, make sure you document that you have met your states requirements.

[AISTQM]

I am a PA resident and had a Delaware LLC which purchased a large sailboat in the state of Florida. The vessel wsa federally documented and moved to PA. It took about 3 years for the state of PA to catch up with me and colect the sales tax.

[mythplaced]

Bottom line.....

You may avoid him for a while.....but

The DEVIL WILL DEMAND HIS DUE!

[Perry White]

Sell your plane and I'll garentee The tax man will be after you. It is the sellers responsibility to collect the sales tax . If you don't, It comes out of your pocket. Only way around it is to sell out of state. And it has to be delivered out of state also. If you sell it to someone out of state and he picks it up in your state you are to collect tax. Been there, done that.

[Perry White]

Seems like all you north easters have more tax collectors than you have workers. I wonder why people are moving south.

[wnytaxman]

Originally Posted by Perry White

Seems like all you north easters have more tax collectors than you have workers. I wonder why people are moving south.

Perry, you are so right. We have a lot more full moving vans heading south than heading north and it's not just because of our winters!

[Perry White]

Guess pretty much job security in your position up there.

[wnytaxman]

Originally Posted by Perry White

Guess pretty much job security in your position up there.

Sadly it is just the opposite. No small business means no clients which means no revenue. We've watched most of our small manufacturers either leave for right to work states or just go out of business. One of the things that keeps our area going is the cross border business from Canada. We joke that we have become Toronto's largest suburb.

Getting back to the sales tax issue, NY is not the only state that has gotten extremely aggressive in chasing taxes. You can add MA, CA, CT, RI, NJ, and even Florida and North Carolina to the list. The states planned on the good times lasting forever and they were wrong. I think there are only three states that are not facing severe deficits. When that happens you either decrease spending or increase revenue or both. Tax enforcement is part of the increasing revenue aspect.

[RickO]

Originally Posted by billsmax

wnytaxman,

I compliment you on your restraint in responding to his comments

Ditto. Very professional.

Rick