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LLC, Partnership & Corporation Manual Contents |
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THE GRAND PLAN
Table of Contents
1. INTRODUCTION
2. THE BASICS
So, Why Do I Need Asset Protection?
Asset Protection Overview
And Just Who Needs Asset Protection?
Discouraging Litigation
Transferring Liability
Freezing Funds
Other Objectives
Isn’t Asset Protection Sleazy?
Let’s Begin
Basics for Every Investor
Insurance – The First Line of Defense
Title Insurance
Hazard Insurance
Intermediate Steps
Asset Protection Planning
The Three Categories
3. USING ENTITIES
Understanding the Tax Implications
DEALER PROPERTY
S vs. C Corporation Overview
Health Savings Account & High Deductible Plan
The Plan for Active Income
NVESTMENT PROPERTY
The Plan for Passive Income
THE LLP & LLLP
The Charging Order
Summary
4. THE PERSONAL RESIDENCE
The Homestead Exemption
Ownership Considerations for Residence
Tenant in Common
Joint Tenancy
Tenancy by the Entirety
Community Property
5. CONTAINING LIABILITIES
Single-Member Limited Liability Company
What Goes in Each SLLC?
Single-Member Entities
Splitting Up Assets Among SLLCs
Corporations and SLLCs
The Land Trust
I Already Have Land Trusts, How Do I Do It?
Concept of Layering
Summary of a Grand Plan
6. EQUITY STRIPPING
Types of Equity Stripping
Independent Equity Stripping
Private Lender Equity Stripping
A Twist on Private Financing
Line-of-credit Equity Stripping
Blanket Lien Equity Stripping
Cross-Collaterization Equity Stripping
Securities and Equity Stripping
Accounts Receivable and Equity Stripping
7. ADVANCED – THE NEVADA/WYOMING CORPORATION
Improper Use Of An Out-Of-State Entity
Proper Use Of An Out-Of-State Entity
Warbucks Nevada, Inc. / Red, Inc. Strategy
8. HIGH NET WORTH
The Charitable Remainder Trust
Dynasty Trusts/Perpetual Trusts
The Domestic Irrevocable Trust
Offshore Asset Protection Trusts
THE LIMITED LIABILITY COMPANY & PARTNERSHIP
TABLE OF CONTENTS
1. Introduction
2. Entities for Business & Investment
Proprietorship
General Partnership
Limited Partnership
Corporation
Limited Liability Company
Some Possible Advantages of an LLC over an S Corporation
Advantages of the LLC over the Limited Partnership
3. What is a GP, LP, LLP, LLLP, & LLC
What is a General Partnership (GP)?
General Partnership History
What is a Limited Partnership (LP)?
Limited Partnership History
What is a Limited Liability Partnership (LLP)?
Some Potential Problems with LLPs
What is a Limited Liability Limited Partnership (LLLP)?
What is a Limited Liability Company (LLC)?
A Little History of the LLC
Back to the USA
After Wyoming
4. Asset Protection
Limited Liability Status
Partnership & LLC Interests
The Charging Order
Concept and Legal Basis Behind the Charging Order
Foreclosure of Partner’s Interest
The Crocker and Hellman Cases
Personally Guaranteed Debts
The Liability Segregation Technique
Investment Properties
Anonymity
5. Management & Financial
Management Structure
General Partnership
Limited Partnership
The Flexible LLC Management Structure
Member-Managed or Manager Managed
Membership Interest & Voting Rights in the LLC
Voting vs. Non-voting Members
6. Tax & Financial Issues
Check the Box Rules
Bulletproof vs. Flexible Statutes
Limited Liability Partnership (LLP)
Limited Liability Limited Partnership (LLLP)
Changing an Existing LLC or Partnership
Partnership Income Tax Filing
Filing Requirements
Tax Matters Partner (TMP)
Startup Expenses
Partner’s or Member’s Unreimbursed Expenses
The Self-Employment Tax issue
How an S Corporation can Solve this Problem
OOPs, I am Getting a Guaranteed Payment
A Final Note on Self-Employment Tax
Distributions & Basis
What is Basis?
Contributed Property
Services Rendered in Exchange for Ownership or Gains Interest
What does Basis Have to Do with Distributions?
Distribution of Profits and Losses
Disproportionate Distribution of Profits and Losses
Substantial Economic Effect
Disguised Sales Rules
Related Parties Transactions
Exclusion From Partnership Treatment
The One-Member LLC
State Tax Caution
7. Estate planning
FLPs & FLLCs
Gifting While Maintaining Control
Family Limited Partnerships Discounts
Protecting Family Assets from Creditors
Income Tax Implications
Gift Tax Returns
Disadvantages of a FLP & FLLC
8. Other Considerations & Opportunities
The Securities Issue
LLC Opportunities
Licensed Professionals
9. Formation
The LLC
Some Definitions
Forming the LLC
LLC Name
Articles of Organization
After the State Filing
Operating Agreement
Manager-Managed or Member-Managed
Operating Agreement Checklist
Organizational Meetings
Documents to Retain
LLC Electing to be Taxed as S Corporation
Election to Become an S Corporation
S Corporation Provisions for an LLC Operating Agreement
Forming an LLP
Forming an LLLP
10. Day-To-Day Operations
Contributions
Contributing Property Having a Mortgage
Contributing Property Held in a Land Trust
Buying a Property Requiring a New Mortgage in the LLC
Refinancing a Property Held by the LLC
When to have Meetings, Minutes and Written Consents
Who Should Attend the Meetings?
Why do We Need to Document Our Decisions?
Deciding Between Minutes of Meetings and Written Consents
A Caution on Written Consents
Signing on Behalf of the LLC
Bank Account & Commingling Funds
11. Converting Between Entities
Conversion of a General Partnership to a LLP
Conversion of a Limited Partnership to a LLLP
Conversion Of A Corporation to an LLC
Conversion Of An General Partnership to an LLC
One to Multiple Members & Multiple to One Member LLC
Single-Member to Multi-Member LLC
Multi-Member to Single-Member LLC
12. Dissolution
Termination Of A Partnership
Appendix 1 – Glossary of Legal Terms
Appendix 2 – State Law Summaries
The Corporate Fortress
TABLE OF CONTENTS
1. AVAILABLE BUSINESS ENTITIES
Introduction
Sole Proprietorship
Partnership
General Partnership
Limited Partnership
Limited Liability Company
Corporation
Personal Service Corporation
Personal Holding Company
A Little Corporate History
Land Trusts
2. COMPARISON OF CORPORATIONS TO OTHER ENTITIES
Non-Tax Comparisons
Limited Liability
Separate Legal Entity
Organization and Management Structure
Continuity of Existence
Transferability of Interests
Formalities of Organization
Federal Tax Comparisons
Transfers to Business Entity
Tax Rate Considerations
Treatment of Losses
Choice of Taxable Year
Fringe Benefits
Retirement Plans
Compensation
Distribution of Net Profit Example
Estate Planning Considerations
Summary of Key Considerations in Entity Decision
3. THE DECISION TO INCORPORATE
Dealer vs. Investor Property
What's Next?
Paperwork and Formalities
4. THE CORPORATE STRUCTURE
The Corporate Anatomy
Incorporator
Registered Agent
Stockholders
Directors
Officers
Capitalization
Startup Expenses
Articles of Incorporation/Certificate of Incorporation/Charter
Bylaws
Statutory Close Corporation – Not A Great Idea
Corporate Veil
Buy-Sell Agreements
Stock
Authorized Shares
Issued Shares
Par vs. No Par Value Stock
Common vs. Preferred Stock
Where To Incorporate
Using a Lawyer to Incorporate
5. SETTING UP YOUR OWN CORPORATION
Forming and Organizing the Corporation
Name Selection
Name Reservation
Articles of Incorporation
Authorized Shares
Registered Agent
Corporation's Principal Office
Notice of Intent to Incorporate
Completion of Filing
Completion of Organization
Capitalization
Issuance of Stock
Ratification of Shareholders
Shareholder Agreements/Buy-Sell Agreement
1244 Stock
THE CHOICE OF FISCAL YEAR
Making the Decision to Elect S Corporation Status
General Eligibility Requirements
S Corporation Advantages
S Corporation Disadvantages
6. ONGOING CORPORATE FORMALITIES
REQUIRED MEETINGS
Annual Stockholders Meeting
Annual Directors Meeting
ADDITIONAL CORPORATE FORMALITIES
Public Perception
Signing on Behalf of Corporation
Bank Account & Commingling Funds
Corporate Resolutions
Corporate Seal
Theory of Alter Ego
7. DAY-TO-DAY OPERATION & STRATEGIES
Salary & Dividends
The Double Taxation Issue
Salary vs. Dividend
Reasonable Compensation
Accident & Health Insurance
C Corporation
S Corporation
Good News for the S corporation Owner-Employee
Divisions & Subsidiaries
Generating Corporate Income
Property Management
Equipment Lease
Home Office
Corporate Office Rental
Corporate Losses
Accumulated Earnings Tax
Converting a C Corporation to an S Corporation
Multiple Corporations
Parent-Subsidiary Corporations
Brother-Sister Corporations
Corporations Not Considered a Controlled Group
APPENDIX A: GLOSSARY
APPENDIX B: DEPARTMENTS OF CORPORATION BY STATE
APPENDIX C: SOME INCIDENTAL LEGAL TOPICS
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