Re: Still Respectfully disagree… - Posted by JHyre in Ohio
Posted by JHyre in Ohio on December 01, 2000 at 15:46:00:
We agree on use of templates. We agree that asset protection does involve more than mere filings, choice of entities and the like. We agree that in some situations, an attorney is not necessary to create an entity. We do not agree on Nevada.
Alot of people in Nevada make their living off of pushing Nevada entities for almost every conceivable situation…I would be wary of relying on such people’s advice when asking “Is Nevada where I should incorporate?”. To a guy with a hammer, everything looks like a nail. The benefits touted by the people who make their living off of creating NV entities include:
“No income tax”. True, unless you are doing business in one of the other 49 states, in which case you ARE taxable there on business (as opposed to non-business) income. If you have lots of non-business income (dividends, royalties, etc) NV MAY be a good place to form your entity- DEPENDING on the rules of your home state (i.e.- “throwback” rules designed to get around NV entities.) For example, I pointed out that TX has a big loophole via use of DE or NV LP’s…but try that in OH and you WILL lose. Point: NV’s zero income tax is a benefit to out of state businesses in very specific situations and the availability of such situations depends heavily on home situs. Recommending NV entities as a general practice (you seem to do this, PLEASE correct me if I’m wrong!) is not good advice. Florida, your home state, should lend itself to certain kinds of tax planning because it (like few other states) has no personal income tax.
“Secrecy Laws”- mean very little if you are doing business in another state because THAT state CAN and WILL require disclosures. Most small real estate investors are in fact “doing business” in their home state.
“Limited liability of corporate officers”- matters if your shareholders sue you. Most small investors ARE the shareholders AND officers, so this isn’t relevant to most of our audience. All other liability (e.g.- MH burns down) is governed by the state where liability is incurred AS determined by THAT state (i.e.- choice of law doctrines). Nevada will NOT save me from liablility for a fire in Ohio.
“NV doesn’t share info with the IRS” and the IRS knows it. Guess which corporations get more scrutiny as a result? Those that are in states that attract people with something to hide. NV is such a state. NOTE: I am NOT implying that YOU or any other specific indivdual has something to hide- but NV DOES attract alot of that- and the IRS doesn’t know that you are not of those people!
Ernest, I have enjoyed your materials and speaking with you at the 99’ CREOL convention in Dallas. I respect your opinion and expertise- but must strongly disagree with what I perceive your opinion to be on NV entities. Surely, you will correct any misperception on my part.