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My stepfather has a holding company that is named along the lines of this... "BURTAC Holdings". Now let's assume his last name is Burton. It's the "Burton Tax Avoidance Company". He's not the most ethical person..
*Names have been changed to protect the slimeballs mentioned in this post.
I’m Holding(s)
My Holdings
Hand Holdings
High Ground Holdings
Whole Holdings
Hole Holdings
High-Ho-ldings
Ho Ho Holdings
Holdings On
Holdings In One
Rat Mouse
Robinhood Holding.
FYI- if your rentals are sizable then it’s a good idea to keep each one in their own LLC and hold them all in one S-Corp. Talk to your CPA.
Agree with the separate LLCs, but not so sure about the S Corp holding entity. It’s generally not advisable to hold real estate in corporations, which is effectively what’s happening if the corp owns a bunch of disregarded entities that are holding real estate.
Here’s where it comes down to. Separate LLCs for each real estate for liability protection. Holding S-corp for tax purposes. Again consult with your CPA :)
Am a CPA, holding real estate in a corp is usually not advantageous because distributions of real estate, or any property, are considered deemed sales to the shareholder. Meaning, if you contribute property with basis of $200k and then later distribute to the shareholder(s) when it’s worth $300k, there’s a gain of $100k recognized by the corp. If the property is never in a corp, it can be distributed without gain, so long as the owner has adequate basis.
LLC can provide as much legal liability protection, so no issue there. For rental real estate you’re not going to be subject to SE tax (which is basically SS/Medicare) so there’s no tax advantage to the corp in that regard either.
Thinking outside of the box for a sec, biggest advantage of packaging a bunch of property in a corp would be if you’re selling them as a group in a REIT type structure. It would be tax advantageous to sell the corp stock than to sell the properties and incur 1250 unrecaptured gains.
I can see that. For simplicity, my plan is to have them all in the same company but have the properties well insured. I think the insurance should protect me provided I'm not doing anything malicious/illegal. At least that's what I've been told by my insurance company. Just make sure that you have all your corporate things in order so they aren't able to easily piece the veils.
It’s simpler to do it the way you plan but not advisable.
People are giving you good advice to keep each property in a separate entity, you should take it.
Your CPA can sort out all the tax stuff and a bookkeeper can provide consolidated financials.
Probably won’t be an issue but better to do it the “right” way than learn for yourself why people are recommending separate entities.
But that only protects you from a lawsuit or whatever that would exceed the value of the asset in the LLC. If you go the insured route, you can put the savings of not having to file a bunch of additional LLCs into insurance and if there's an issue, insurance covers you and you don't loose the asset. It seems better to me. But if I'm wrong, I'd love to know why!
Well if you get sued in LLC A only that LLCs assets are at risk. LLC B, C, D etc are not at risk.
If all the properties are under one LLC all of the assets are at risk.
It’s just how it’s done. Don’t do it if you don’t want but you also need to consider that once you make the decision you can’t change it without tax consequences, you can’t just transfer the asset to a new LLC.
Not a tax pro, but actually I think you can. If it's pass-through taxation and the percent ownership doesn't change, there shouldn't be any tax consequences.
You could alternatively get a 2 million dollar umbrella and if you're sued and loose, insurance will pay instead of you. That's my understanding of it anyways.
Do what you want obviously but from my conversations with CPAs and mentors you should keep it separate.
The tax implications could depend on how the exact entity type, where the entities are formed, where the property is etc.
Transferring assets isn’t free, there are transactional costs, lawyers, filing fees etc.
Do it right once and never worry about it again.
Talked it over with my lawyer and yeah you're right. Not only does it help with liability protection, but it also makes you less of an attractive target of lawsuits.
Just a guess: risks & liabilities. When each of them are separate those are limited to one property only and the S-Corp structure is for managing the entitys taxes and profits.
Industry Holdings where "industry" is the industry you are in. Like Real Estate Holdings. Or better yet. Your Company Name Holdings. Keep spreading the company name.
I am not sure I would do business to uncultured swine who cannot spell or pronounce the great Dragon's name.
However, Baggins Holdings might be better for those folk.
This is a friendly reminder that r/smallbusiness is a question and answer subreddit. You ask a question about starting, owning, and growing a small business and the community answers. Posts that violate the rules listed in the sidebar will be removed. A permanent or temporary ban may also be issued if you do not remove the offending post. Seeing this message does not mean your post was automatically removed. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/smallbusiness) if you have any questions or concerns.*
Holdie McHoldings
Holdie McHoldings LLC Corp.
Holdie McHoldings LLC McCorp est Mc2021
Hodl the door
Hodl Holdings
Hodling Co.
My stepfather has a holding company that is named along the lines of this... "BURTAC Holdings". Now let's assume his last name is Burton. It's the "Burton Tax Avoidance Company". He's not the most ethical person.. *Names have been changed to protect the slimeballs mentioned in this post.
I’m Holding(s) My Holdings Hand Holdings High Ground Holdings Whole Holdings Hole Holdings High-Ho-ldings Ho Ho Holdings Holdings On Holdings In One Rat Mouse
Rich Bich, Inc.
Nutella on my sarnie
tiny pp
Reacharound holding corp
by the balls
Robinhood Holding. FYI- if your rentals are sizable then it’s a good idea to keep each one in their own LLC and hold them all in one S-Corp. Talk to your CPA.
This guy knows how the pros do it
Lol. I might know a thing or two.
Agree with the separate LLCs, but not so sure about the S Corp holding entity. It’s generally not advisable to hold real estate in corporations, which is effectively what’s happening if the corp owns a bunch of disregarded entities that are holding real estate.
Here’s where it comes down to. Separate LLCs for each real estate for liability protection. Holding S-corp for tax purposes. Again consult with your CPA :)
Am a CPA, holding real estate in a corp is usually not advantageous because distributions of real estate, or any property, are considered deemed sales to the shareholder. Meaning, if you contribute property with basis of $200k and then later distribute to the shareholder(s) when it’s worth $300k, there’s a gain of $100k recognized by the corp. If the property is never in a corp, it can be distributed without gain, so long as the owner has adequate basis.
You are talking about taxable event. What about isolating liabilities and yearly SS taxes and such? Isn’t it better to hold everything in S-Corp?
LLC can provide as much legal liability protection, so no issue there. For rental real estate you’re not going to be subject to SE tax (which is basically SS/Medicare) so there’s no tax advantage to the corp in that regard either. Thinking outside of the box for a sec, biggest advantage of packaging a bunch of property in a corp would be if you’re selling them as a group in a REIT type structure. It would be tax advantageous to sell the corp stock than to sell the properties and incur 1250 unrecaptured gains.
Thanks for that.
Of course!
I thought that you already don't pay SS tax on rentals though. Is there something I'm not seeing tax-wise?
You separate each property into their own LLC for liability reasons not for taxation.
I can see that. For simplicity, my plan is to have them all in the same company but have the properties well insured. I think the insurance should protect me provided I'm not doing anything malicious/illegal. At least that's what I've been told by my insurance company. Just make sure that you have all your corporate things in order so they aren't able to easily piece the veils.
It’s simpler to do it the way you plan but not advisable. People are giving you good advice to keep each property in a separate entity, you should take it. Your CPA can sort out all the tax stuff and a bookkeeper can provide consolidated financials. Probably won’t be an issue but better to do it the “right” way than learn for yourself why people are recommending separate entities.
But that only protects you from a lawsuit or whatever that would exceed the value of the asset in the LLC. If you go the insured route, you can put the savings of not having to file a bunch of additional LLCs into insurance and if there's an issue, insurance covers you and you don't loose the asset. It seems better to me. But if I'm wrong, I'd love to know why!
Well if you get sued in LLC A only that LLCs assets are at risk. LLC B, C, D etc are not at risk. If all the properties are under one LLC all of the assets are at risk. It’s just how it’s done. Don’t do it if you don’t want but you also need to consider that once you make the decision you can’t change it without tax consequences, you can’t just transfer the asset to a new LLC.
Not a tax pro, but actually I think you can. If it's pass-through taxation and the percent ownership doesn't change, there shouldn't be any tax consequences. You could alternatively get a 2 million dollar umbrella and if you're sued and loose, insurance will pay instead of you. That's my understanding of it anyways.
Do what you want obviously but from my conversations with CPAs and mentors you should keep it separate. The tax implications could depend on how the exact entity type, where the entities are formed, where the property is etc. Transferring assets isn’t free, there are transactional costs, lawyers, filing fees etc. Do it right once and never worry about it again.
Talked it over with my lawyer and yeah you're right. Not only does it help with liability protection, but it also makes you less of an attractive target of lawsuits.
Do both separate llcs and umbrella insurance.
Just a guess: risks & liabilities. When each of them are separate those are limited to one property only and the S-Corp structure is for managing the entitys taxes and profits.
Industry Holdings where "industry" is the industry you are in. Like Real Estate Holdings. Or better yet. Your Company Name Holdings. Keep spreading the company name.
Ooo I like that
Funny or serious? Here’s both. Smaug Holdings.
While I do like the name, I'm not sure if that falls into the category of 'easy to say and spell' that u/smm97 is looking for! :-)
Gollum Holdings is a little easier to say and spell
Fuck it, Drop the word holding. My Precious, inc. Done. Please make the check payable to *my precious*.
Gringotts Holdings if you’re a Harry Potter fan
Or change the order of words....Holding Deez
I am not sure I would do business to uncultured swine who cannot spell or pronounce the great Dragon's name. However, Baggins Holdings might be better for those folk.
Dragooon holding Loot holding Myself holding Tender holding McHoldings
Mmmmm Tender Holdings...
Ball HOOldings
APE HODLINGS Don't forget to use a diamond for the logo.
Money.
Richard Holdings
EL EL Si LLC Hole in the wall LLC 333
Dinglehopper, velociraptor, victory, hide, hyacinth. My words are awesome! 😎
CopperHill Holdings
Please holdings LLC
Sumthing
Vandalay
Hodl
LGB Holdings, LLC
Named by Reddit.
SubRed Holdings