Selling MH notes---Dealer question - Posted by Zoe

Posted by Tony Colella on May 22, 2008 at 08:19:43:

You have listened and followed your friends advice, now what does your accountant or tax attorney have to say?

You need the advice and understanding of your deals and entities to be clear with the folks who will do your taxes. Listen to them and confirm what they say through other tax experts just to be sure. I have found that life gets much easier when you and your tax folks/accountants are on the same page.

Trying to teach them or asking those who are not familiar with these type of tax questions is an exercise in frustration.

Talk directly to those who need to know and can help you along the way.


Selling MH notes—Dealer question - Posted by Zoe

Posted by Zoe on May 21, 2008 at 17:12:55:

I have been told by a local investor friend that I should keep MH rentals & MHP’s in separate (child) LLC’s, owned by a parent LLC (which holds no title to anything, it simply owns the child LLCs & has the bank account & all monies pass thru it). I have since followed his advice, and have everything structured as such.

However, he said if I do activities that the IRS could classify as ‘dealer’ type activities (i.e. buying and selling quickly), that a separate LLC should be formed for that, to avoid the rentals & MHP being subject to ‘dealer taxes’.

My two questions are:

  1. Can the dealer LLC be a child LLC owned by the parent LLC like the others? Or should it be a completely separate LLC that has its own bank account/tax return (that filters down to my return)?

  2. Is selling MH’s (perm. foundation) on land thru real estate contracts, and then selling the REC’s to note investors, classified as a ‘dealer’ type activity?

Any advice is greatly appreciated on this!!! Thanks, Zoe