Taxes: Corp & LLC out of 1 Home Office - Posted by Gr8Rentals


#1

Posted by JHyre in Ohio on January 03, 1999 at 12:47:15:

J. Piper:

While I focus on tax- as opposed to corporate- law, I have never heard of the “same address” piercing the veil. I have seen too many companies at the same address in this country (and vicariously seen it in the Caymans…) to believe otherwise. The people I dealt with were Fortune 500 and had well over 2 dozen companies out of the same address. The Caymans people (Admittedly not always the best examples of what is legal) stuff 100+ corps into one room to take advantage of certain tax treaties and have not been pierced (at least not on that ground!). Having companies at the same address does not offend certian principles of fairness the way being undercapitalized or not following the corporate formalities do. The latter two points are the most common reasons for piercing the corporate veil.

Sincerely,

John Hyre


#2

Taxes: Corp & LLC out of 1 Home Office - Posted by Gr8Rentals

Posted by Gr8Rentals on January 03, 1999 at 03:33:25:

I have a few rental properties and have decided this year is the year to kick things into high gear. (ie. wholesaling and rehabbing) I will be meeting with my accountant and lawyer this week concerning the formation of a Corp AND an LLC.

I plan to have the following for each business:

  1. Each to have it’s own mail box and voicemail box.
  2. Residential phone line to accommodate internet access (used for both companies). Obviously, also used for personal calls and returning ad calls.
  3. An additional phone line for a fax machine (also used by both companies).

My question is for those of you running your separate entities from the same office in your home…

How do you personally have your companies set up to exist SEPARATELY in the same office for tax purposes? What comapany gets what deductions? I feel I have made this issue bigger than it should be, but I am the type that likes to have all my ducks in a row. Any advise would be greatly appreciated.

  • Gr8Rentals

#3

Re: Taxes: Corp & LLC out of 1 Home Office - Posted by Rob FL

Posted by Rob FL on January 03, 1999 at 11:27:47:

I agree with JHyre. I run a corporation and my realtor business out of the same PO Box. I also run them both out of a spare bedroom in my home. For tax purposes both of them lease the room from me and my wife for a nominal fee. They are both s-corporations so no money actually changes hands (it all washes out in the end). Your deductions should be done on a percentage of use. For instance if 1 corporation uses the phone line 50% of the time they should get 50% of the deduction. Talk to a tax pro for more details.


#4

Re: Taxes: Corp & LLC out of 1 Home Office - Posted by JHyre in Ohio

Posted by JHyre in Ohio on January 03, 1999 at 09:37:44:

As always, you should consult a professional and tell them ALL of the details. With that said, you should have plenty of flexibility as to which entity takes the deduction. The catch is that the company taking the deduction must actually pay rent or own the home space (in the latter case you probably have to depreciate the owned property). The simplest thing to do is take the deduction yourself- it will still offset your income from the LLC and/or corporation.

Companies are set up from the same address/mailbox for tax purposes all the time (I’ve seen 2 dozen out of the same address). As long as you follow the formalities and consistently treat the entities as separate, the tax law should respect your structure.

Good luck,

John Hyre


#5

Piercing the Corp Veil…? - Posted by JPiper

Posted by JPiper on January 03, 1999 at 12:29:56:

John:

What would your view be as to the possibility of having the corporate veil pierced as a result of not having a “unique” address, or a “unique” phone number for the corporation in question?

JPiper