LLC too expensive in TN? - Posted by Katerina TN

Posted by JHyre in Ohio on May 22, 2003 at 17:59:12:

First, see if TN follows the federal rules and disregards single-member LLC’s for tax purposes…if it does, use a SMLLC. Otherwise, I’d use the trusts & corporate manager, get lots of insurance and be very mindful of your duties as a landlord…in my view, paying 6% of your profits for the asset protection is not a good deal. Now, if the rentals produce very small profits or losses AND the capital portion of the tax only applies to NET capital, highly leveraged rentals may not give rise to a tax liability.

John Hyre

LLC too expensive in TN? - Posted by Katerina TN

Posted by Katerina TN on May 20, 2003 at 22:14:48:

I have been looking through archives on tax implications of LLC in TN. I was about to start forming an LLC, and was reading many posts talking about high CA taxes and high (4.5%) franchise tax in TX. But then I went to Bronchiks state by state tax table (from his LLC course) and it says that TN has 6% excise tax on LLC or partnership.

Here is what is says:

"Franchise Tax rate is 25¢ per $100, or a major fraction hereof of the amount of outstanding capital stock, surplus and undivided profits apportioned to Tennessee, but the amount so apportioned shall not be less than the actual value of the real and tangible personal property owned or used in Tennessee - minimum is $100.

Excise tax is 6% of net income. Estimated tax declaration is due by 15 of 4 month of tax year, if tax to exceed $2,000. Pay in four equal thinstallments (15 of 4 , 7 , 10 , and 13 mos.)"

Can someone translate that into English please?! What is excise tax and would I have to pay it if I am doing L/Os and such?

Thank you.


Found answer - HELP! Now what do I do? - Posted by Katerina TN

Posted by Katerina TN on May 21, 2003 at 17:14:40:

Well, I found the answer to my question: C corps, s corps, LLCs, LPs & LLPs are all subject to 6% excise tax and .25% franchise tax. NOW WHAT DO I DO?

I wanted to utilize LLC for asset protection for my L/Os and rentals, but I don?t want to pay that much extra tax. What is my other alternative?

I thought about forming a corp for managing my rentals and then own each one in a separate trust with an umbrella liability policy. The corp would not have much net income, but provide some write off for expenses and would be the dealing person on all contracts. I know I could still get sued if someone finds out who is the bene of the trust, but I guess that?s what ins policy of for.

Please give me some feedback on this! My mind is boiling!

(And all that after buying several costly asset protection courses!)