Setting Up An LLC

Is there tax involved when you start an LLC (or any Corp.) for moving the money from you to your newly formed Corp?

Comments(25)

  • NewKidInTown35th November, 2010

    If I understand your question, the answer is NO. Capital that you personally contribute to your new entity is not taxable income to the entity.

  • pluMmet24th January, 2011

    Thanks for answering.

  • bargain7625th January, 2011

    My CPA advised me to put very little money to capitalize the Corporation, but LOAN the new entity whatever it needs for start-up.

    Loans can be paid back to you without taxation.
    [addsig]

  • pluMmet25th January, 2011

    Quote:
    On 2011-01-25 12:31, bargain76 wrote:
    My CPA advised me to put very little money to capitalize the Corporation, but LOAN the new entity whatever it needs for start-up.

    Loans can be paid back to you without taxation.



    Great idea!

  • NewKidInTown326th January, 2011

    Quote:
    On 2011-01-25 14:39, pluMmet wrote:
    Quote:On 2011-01-25 12:31, bargain76 wrote:
    Loans can be paid back to you without taxation.
    Great idea!
    Of course, if it is a true (arms length) loan, the LLC will be paying you interest on the loan which becomes a deduction for the LLC but taxable income to you.

    If your LLC is a disregarded entity, then it does not really matter how you capitalize the entity. You and the entity are the same person and comingled funds is not an issue.

  • cjmazur17th May, 2011

    Quote:
    If your LLC is sued because of your actions (something you did, or should have done but failed to do), you will also be personally named in the lawsuit and your personal assets have liability exposure. Does not matter that you have a SMLLC.



    NK, I was told by my attorney that if the LLC held title, and I was acting on behalf of the LLC, the person suing would need to be pierce the "vail" off the LLC before personal liability was established.

    Is this something that varies from state to state? I was discussing a CA LLC in hypothetically being sued in CA.

  • NewKidInTown318th May, 2011

    Chet,

    No attorney will just sue your SMLLC. You as the owner/manager will also be named in the lawsuit. If the grounds for the lawsuit arose from your personal actions as the property manager, then you will have personal liability exposure.

  • joel18th May, 2013

    That is my understanding also Cyndyb.

  • TIMBELLO26th May, 2013

    My name is tim bello i want to no if you have a house for sale, pls do get back to me via my e-mail: **Please See My Profile**
    I will be waiting to hear from you.
    TIM BELLO
    [addsig]

  • joel28th May, 2013

    What about putting the property into a Land Trust with putting your child as the owner of the Land Trust.
    That would eliminate probate, convey the property correctly and save you transfer fees.

  • Medusa5228th May, 2013

    Thanks all! Update-Builder made unbelievable 249k offer house 1. Closed 1-3-13. Will pay all capital gains and still be way ahead. Thank all here. Builder will tear house down and put up 2 seperate ne houses @ 200 per sq ft each in Hot Hot Hot Royal Oak Michigan. Yuppies now want to live in urban and i just got blessed. I am holding everything. Thanks

  • NewKidInTown35th February, 2011

    Self directed IRAs have been around for decades. Use the search feature at this site to find dozens of discussion threads on the topic.

  • amyarata9th February, 2011

    I did search this website before posting my question and did not find any specific recommendations from anybody with personal experience.

  • Johnnyq21410th February, 2011

    Brian Davis
    Business Development Manager
    Entrust Administration, Inc

    8880 Rio San Diego Drive, Suite 800
    San Diego, CA 92108
    Phone: (619) 209-6056

    Fax: (888) 874-3568
    **Please See My Profile**
    www.EntrustCalifornia.com

  • cjmazur28th May, 2013

    What I have seen is there is not a lot of clarity or consistency between custodians. VIKING RETIREMENT ASSETS CUSTODIAN seemed the most liberal and consistent. They had a very small geographic service area. The last I looked at them was a couple months ago and saw this "VRAC to close April 30, 2013 ". I have not followed-up to see if someone is taking it over.

  • joel28th May, 2013

    Thanks Chet.

    If anybody finds out who is servicing the East Coast, please let me know. It will be much appreciated.

  • commercialking29th March, 2014

    Not sure what you are asking Joel, do you want to purchase the house with funds from the IRA or borrow against the IRA as downpayment to purchase (as you can with a 401 K)
    Several of my investors are working with funds from their IRA (both Roth and Conventional)

    Who is the TPA for the IRA
    [ Edited by commercialking on Date 03/29/2014 ]

  • commercialking29th March, 2014

    You have money in a 401 k now. Is it with a previous employer and you first want to roll it into a self-directed?
    Are you going to live in the new house or is it an investment?

  • joel29th March, 2014

    is for investment purposes only.

  • commercialking29th March, 2014

    You need to contact your 401 k administrator and ask for a copy of their lending policy.

    Generally you can borrow $50,000 or half your balance-- whichever is less.

  • joel29th March, 2014

    The only problem with that mark is that you can only take out half of your Roth IRA funds and return them within 90 days, otherwise there will be a fee involved.

    Correct me if I am wrong guys.

  • joel29th March, 2014

    The only problem with that mark is that you can only take out half of your Roth IRA funds and return them within 90 days, otherwise there will be a fee involved.

    Correct me if I am wrong guys.

  • commercialking30th March, 2014

    Sorry, Joel. Brain fart on my part. Somehow I got confused and thought the money was in a 401k-- my fault.

    Is it a self-directed Roth?

    You cannot loan the money from the IRA to yourself, an entity you control or various other prohibited persons.

    You could conceivably buy the house in the IRA but then you need non-recourse debt (usually limited to about 50% LTV) AND you will pay an exorbitant tax rate (UBIT) on the pro-rata share of the income that comes from the borrowed money.

    It might be wiser to find a "partner" to buy the house and loan the money from your SDIRA to him as a down payment with some equity participation agreement.
    BTW I am paying 10% annual returns to people who lend to me from their IRA and giving them first position mortgages. 5 to 10 year amortization periods-- investors choice of how long they want to tie up the money.

    The other choice would be to figure out how to roll out of your SDIRA into a solo 401k where the rules are a lot more generous.
    [ Edited by commercialking on Date 03/30/2014 ]

  • joel29th April, 2014

    Loon,

    How much was the setup for the Roth IRA setup? And what is the ongoing costs?

  • joel29th April, 2014

    That is much cheaper than I anticipated. I was looking at a 2k setup and ongoing costs of 150.

    Thanks!

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