LLC or Corporation for holding notes on MHs? - Posted by Nicole_AZ

Posted by Tony-VA on January 27, 2000 at 13:52:39:

First let me state that I am not a lawyer or an accountant but here is what I have gathered. Hopefully others will post as well.

For passive income (notes, rent etc.), you can hold them in a S-Corp. but not in a C-Corp. The IRS would view the C-corp. as a holding company if it had too much passive income.

As for avoiding dealer status, I don’t believe one entity will protect you better than another. If you are buying with the intent of selling, you are likely to be viewed as a dealer by the IRS regardless of the entity. Perhaps JHyre can confirm or deny this.

For holding notes, I would suggest that you look into an LLC. The LLC is know as the “lazy person’s corporation”. The formalities are less. If you are the sole member, or you and your spouse are the sole members, the IRS looks at this as a non-entity for tax purposes, thus you have less tax returns to do. Like an S-Corp., the income passes through to you.

Regardless of my input or others, please do your own independent research here. Make certain that you are confirming these answers.

Best wishes for your success,


LLC or Corporation for holding notes on MHs? - Posted by Nicole_AZ

Posted by Nicole_AZ on January 27, 2000 at 11:51:30:

Which entity would be better to form when buying and selling mobile homes to carry the notes? I would think that due to the risk of the dealer status, it would be corporations but I am not positive. Thanks in advance.


Re: LLC or Corporation for holding notes on MHs? - Posted by David Alexander

Posted by David Alexander on January 27, 2000 at 15:21:56:

The answer is multiple entities. Before I say anything let me say I’m not an accountant, and I’m learning this stuff as I go.

You can set up a C corp to buy the MH’s and sell the Notes to an LP, That will keep your passive income, passive and your Corp doing the business will have the cash and be the dealer. You can further compound this by having Nevada management C Corps, but we wont go there for now.

I would reccommend a book by Sage INTl,, called “Inc. and Grow Rich” it’s only about 50 bucks and worth every penney.

David Alexander