Posted by JHyre in Ohio on September 13, 1999 at 10:19:51:
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Mr. Bronchick and legal Guru’s - Posted by Jaydee
Posted by Jaydee on September 11, 1999 at 19:26:49:
I recently sat down with my accountant and went over the idea of putting my properties into separate legal entities for liabilty protection .( trusts ) Having bought and gone through Mr. Bronchick’s course , I felt reasonably confident about discussing the legalities of such a move . After about an hour of discussion he said that the expence involved to do this in no way justifies the protection . In addition he said that it would create an accounting nightmare which is where the costs would begin to mount up . Each entity would have to file it’s own separate tax return . His solution was to simply purchase liability insurance protection which he feels is far more simple and cost effective . His feelings were that if any one tenant should take me to court it would just be a matter of time before the whole thing was exposed anyway , therefore he felt it would really be defeating the objective of the excercise - that of creating wealth through real estate and then spending a fortune to protect it .
Any thoughts and coments on this would be most appreciated and thanks in advance .
Re: Mr. Bronchick and legal Guru’s - Posted by John(NH)
Posted by John(NH) on September 13, 1999 at 10:30:40:
I don’t know what your accountant is charging you, but
I had mine proof Bill Bronchick’s Land trust form for
$150 (some minor changes regarding laws in my state). Now I create a land trust for every property I acquire and the total costs are less than $50 per (for
recording the quitclaim deed). Also, the beneficiary
for each land trust is my single-member LLC… Very
simple and cost effective.
Additional note . . . - Posted by Brad Crouch
Posted by Brad Crouch on September 12, 1999 at 17:06:35:
I just located the web site for Sage International, Inc. More information and prices can be found at:
Brad
Consider this . . . - Posted by Brad Crouch
Posted by Brad Crouch on September 12, 1999 at 16:13:37:
Jaydee,
I have just finished reading an incredible book called, “Inc. & Grow Rich” by C.W. Allen, et al.
The book doesn’t talk about trusts much, but gives VERY detailed information about the various business entities that are available. The book promotes the notion of forming Nevada Corporation(s) but whether this is desired or not, there is a tremendous amount of Info in there.
I guess you could get the book through Sage International, Inc. located in Reno, Nevada. Their phone number is 800-254-5779.
Good luck,
Brad
Re: Mr. Bronchick and legal Guru’s - Posted by Bill Gatten
Posted by Bill Gatten on September 12, 1999 at 15:56:34:
Not being a guru (much less a legal Beagle) I’m a little reticent to respond here; however, I’m complled to second what Bill Bronchik said, and elaborate on it just bit.
One of the major nuances of land trusts is that the trustee does not file a tax return: the beneficiaries file their own 1040’s (or which ever form they would normally file). That is not to say that there is a separate return because of the trust…it means only that there is another page and about the same paperwork as if you held your property interest any other way. I own lots of properties in land trusts (along with co beneficiaries) and there has never been an extra cost for anything as far as my Accountancy is concerned).
And as far as your tenant’s taking you to court…and being “exposed”…I guess I’m a little fuzzy on what his concerns are. Remember (a famous HE-HOO): “He who see burglar behind every bush, bear larcency in heart–Chinese Proverb (you can tell by the missing parts of speech)”
Land trusts PROTECT your assets from exactly what it is that he seems so concerned about. I say, spend a little to protect your real estate fortune so that you CAN create lasting wealth.
Bill (un-attorney) Gatten
Re: Mr. Bronchick and legal Guru’s - Posted by Laure
Posted by Laure on September 12, 1999 at 09:47:20:
My CPA says the same thing too. However, I opened a C corp anyway for rehabs and flips. The tax savings outweighs the cost of the tax return not to mention the liability protection. Of course, it depends on the volume of business. You save a bundle on taxes up to around 100k.
Each person’s situation is different. I do recommend educating yourself. No one person can tell you what is best for you. I have hired CPA’s for 20 years for my business and rentals. I wish I knew then what I know now. I would be a lot richer !!! And what I know now, I learned on this site !
Laure 
Re: Mr. Bronchick and legal Guru’s - Posted by Bronchick
Posted by Bronchick on September 11, 1999 at 21:13:43:
I dare not say “get a new CPA” if this is your friend or brother-in-law, but this is a simplistic (and somewhat incorrect) view of things. First, a land trust does not file a tax return, nor does it require a tax ID#. Nor does a single-member LLC. Thus, both of these can give you good protection without extra tax filings.
As for entities that do require time and paperwork, as yourself this: “is anything that protects your wealth worth the time spent doing it?”
Second
1 LLC or multiple - Posted by Dave
Posted by Dave on September 13, 1999 at 11:12:22:
John,
Do you just have 1 LLC for all of your properties, or does each property have one? Seems like you would be exposing more assets to risk by only have one.
Dave
Re: Consider this . . . - Posted by David Alexander
Posted by David Alexander on September 12, 1999 at 20:45:55:
Brad, what your take on the Info. Workin on my entity strategies right now, for both taxes and privacy.
Was he pretty informative on the Nevada stuff?
Thanks,
David Alexander
Re: Mr. Bronchick and legal Guru’s - Posted by Jeff Short
Posted by Jeff Short on September 13, 1999 at 06:04:48:
I think that I can understand where the “extra expense” in doing a Tax Return could come in… but please help me out if I am incorrect in my thinking.
Let’s say that I form single-member LLCs for my rental activites. It sounds like we are discussing doing one rental property per LLC (to limit liability)…
For tax purposes, the LLC’s activity flows through to the 1040 (Schedule C or D). Now, if there is no “parent” company that is associated with the Rental LLCs, don’t I need to file a separate Schedule for each LLC?
If I do, then there is where the extra expense comes in. But again, I may be misinformed.
Jeff
Re: Mr. Bronchick and legal Guru’s - Posted by Judy
Posted by Judy on September 12, 1999 at 08:04:35:
My accountant which is not a friend etc. said I also would have a extremely expensive tax return if I put properties in separate LLC’s because they have to file separate returns but not Land trusts. I was discouraged too as to the LLC’s formation and thought of using just the land trusts. He also said tenant could sue LLC plus owner personally therefore still causing liability. I am confused. Do I need to talk to different accountant.
Absolutely! - Posted by Brad Crouch
Posted by Brad Crouch on September 13, 1999 at 19:16:48:
David,
Before you “cement” anything new, you really ought to read “Inc. & Grow Rich”. This is the most comprehensive stuff I’ve ever read on corporations.
And Yes, the Nevada aspects are covered quite thoroughly. And these guys can handle the “business presence in Nevada” issue also, if you want.
I surely think it would be worth your time, energy and money to get this publication. Not sure whether or not it is available from anybody but them.
Good luck,
Brad
No tax return required - Posted by Bronchick
Posted by Bronchick on September 13, 1999 at 09:18:15:
A single member LLC does not file a separate tax return. Reg 301.7701-1(a)(4). Rental property held in single member LLC is reported on the member’s schedule “E” of his 1040.
Re: Mr. Bronchick and legal Guru’s - Posted by Bronchick
Posted by Bronchick on September 13, 1999 at 09:19:59:
You need to speak to another accountant who doesn’t sleep through his/her continuing education seminars.
The regs are clear on this, plus I have a private letter ruling from the IRS on this.
Re: Mr. Bronchick and legal Guru’s - Posted by Rob FL
Posted by Rob FL on September 12, 1999 at 19:14:08:
Your accountant is really confused. I am sitting here staring at my tax form 8832 that I just filed to get the tax id # for my new LLC. One of the boxes that you can elect says “A domestic eligible entity with a single owner electing to be disregarded as a separate entity.” That pretty much makes it clear that LLCs can be a disregarded entity for taxes.
Maybe your CPA is ignorant to tax laws pertaining to LLCs. Pull a copy for yourself: http://www.irs.ustreas.gov/prod/forms_pubs/index.html