Taxes in Texas - Posted by Herman

Posted by JHyre in Ohio on May 05, 2000 at 05:58:41:

I assume you intend the above plan to avoid Texas taxes. It would NOT work with federal income taxes. Husband and wife are CLEARLY related parties for federal purposes and the corps- even if 100% owned by each- are considered related. As such, gain from sale cannot be shifted to note of related corporation. Solution: Sell notes to someone who is unrelated- like fellow MH investor who happens to sell notes to you. Not 100% foolproof given sham transaction doctrines- you need strong business purpose, like diversification. Should work.

John Hyre

Taxes in Texas - Posted by Herman

Posted by Herman on May 04, 2000 at 13:23:38:

Acording to a CPA that I have talked to, the tax on the profit generated from the sale should be paid imidiately
after the sale in full and not later after you received
the income.Is there a way around this in MH deals in Texas.

Not All CPA’s are… - Posted by David Alexander

Posted by David Alexander on May 04, 2000 at 18:39:43:

the same. This isnt just true in Texas, but true if you are a dealer. Dealer classification happens when an entity or person that buys with the intent of selling.

Their are plenty of ways arounds this. People always get caught up on the taxes, go out and make some money first. I promise you that if you go out and make alot of money it will be whole lot easier to digest paying the taxes than the inverse of not making any money and not paying any taxes.

Now if you want to find an aggressive CPA one that probably want suggest an answer to your problem until he knows your plan, then you’ll be better off. You’ll also want to educate yourself on entities and taxes a smidgin too. So that you dont just set there and allow your CPA to tell yuou everything, and what is what, but more of the reverse. Here is my plan, this what I need to write off and how can I get there.

With all that said, here’s a scenario to look at, and remember I think big.

C Corp (My Opinion, Nevada), second C Corp (Texas), and an LP (Nevada)

Tx C buys a Mh for 4k cash, it sells the Mh for 11k with 1k down. It now has 1k cash and a 10k note.

It sells the Note to the LP for 30-50% (IRS should have no problem with this) In this instance 50% or 5k. The Tx C now has 6k cash, and the LP has the note for 10k with which it claims the installment sale and recieves the money as passive income and pays taxes as it recieves.

The Tx C, then buys things for it’s owner and pays it’s expenses, when the Tx C starts making too much money then the Nevada will have done some management, advertising etc, and will need to get paid. If the NV C has a different tax year end then that will spread the tax liability into a different year.

You have to structure these entities accordingly so that you get hit with all the nasties of unproper entity structuring. Consult a good CPA and Tax attorney, entity attorney’s etc.

David Alexander

Re: Not All CPA’s are… - Posted by Ernest Tew

Posted by Ernest Tew on May 04, 2000 at 19:24:17:

David Alexander’s plan for buying and selling homes is very good. However, my CPA thinks it would be a problem in the event of an audit if you or members of your immediate family own a controlling interest in both corporations.

Re: Not All CPA’s are… - Posted by David Alexander

Posted by David Alexander on May 04, 2000 at 20:09:10:

You can avoid the problem (controlled status I believe it’s called) if you wife owns one corp solely and you own the other corp solely. If ones a Nevada no one would no who owns that one.

It all depends on your on personal tolerance risk and how you percieve risk.

David Alexander