California Investors - Save Thousands on Franchise Taxes - Wyoming Statutory Trusty (Real Estate)
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- เผยแพร่เมื่อ 29 มิ.ย. 2024
- How can California real estate investors save money on franchise taxes each year?
If you're a California resident who owns real estate out of state, California has taken the position that it can tax each of those entities as if it's doing business in the state. In doing so, many Californians have been discouraged from creating entities due to the $800 fee for each LLC.
WATCH THIS VIDEO as I discuss what you can do to avoid the dreaded franchise tax for California residents.
Your questions or requests for video topics are always welcome!
Don't forget to Subscribe and if you liked this video give it a thumbs up!
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ABOUT CLINT COONS
Clint Coons, Esq. is one of the founding partners of Anderson Law Group, Clint has grown his legal and tax firm to over 400 employees by assisting real estate investors with creating and implementing solid entity structuring plans. His success in these regards is in large part due to his personal investing experience. A successful attorney, real estate investor, and speaker, Clint has used his innovative and dynamic strategies coupled with knowledge borne from experience to help thousands of people save millions of dollars and build real wealth.
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The information provided in this video should not be construed or relied on as legal advice for any specific fact or circumstance. Its content was prepared by Anderson Business Advisors with its main office at 3225 McLeod Drive Suite 100 Las Vegas, Nevada 89121. This video is designed for entertainment and information purposes only. Viewing this video does not create an attorney-client relationship with Anderson Business Advisors or any of its lawyers. You should not act or rely on any of the information contained herein without seeking professional legal advice.
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I don't know how you only have 75k subscribers. You are the only one out here actually giving great info!
I appreciate that!
For real tho
Clint I think the Wyoming trust is gon😕
Thanks so much Clint !! Very detail and informative!!
Very welcome
This one was a mind melter.. such great info. Thank you!
Glad you enjoyed it!
All of your videos are pretty impactful but this right here is game-changing planning information for investors in CA!
Thanks
Brilliant as usual!
Thanks
KILLER video as I live in California!
Thanks
What are annual maintenance costs for:
- Each Land Trust for each property
- Each Limited Partnership
- The WY LLC that functions as the Holding Company
- The WY LLC that functions as the GP
- The WY LLC that functions as the Trustee (guessing it's the same for all WY LLCs)
- The CA LLC that functions as a Property Manager
?
Thank you for your invaluable videos.
I’m young so I’ll say it this way… straight fire! 🔥
Thanks
I am a California resident- native. I have made a nice return since the 70s. I have sold my primary residence. Converting my weekender to my primary.. Trying to sell my commercial and residential. rentals. Did a 1031 exchange for a condo i Ohio. My daughter sold her salon in Orange County, moved to Ohio, living in my condo for now, starting a new salon. My wife and I are looking for a residence in Ohio. Other daughter who had a astonishing job in Beverly Hills working for a management firm for high end clients has moved back to Ohio. OBTW my 4 kids are OSU grads. People are leaving California in droves. Cliff only touched the tip of the iceberg re California, Dealing withe the state and local “mafia” is incredible. ON MY WAY OUT TO OHIO.
Thank you so much Clint.. I’m having to contact Anderson & A to help me with CA
Glad to help
Had a meetings for estate plan Josh is awesome looking forward to be a client
Excellent.
Thank you for your very detailed and thorough content. Do you have a course with the proper contracts so we can buy to purchase properties Subject to and then Lease option to a sub tenant?
No we do not have such a product. Sorry.
@@ClintCoons Try Joe McCall
Hi Clint, Thanks for the new information. I noticed that in this presentation there is no Holding Company LLC (Wyoming?).
1) How would I use this new 'flow' of entities to end up being owned by my Living Trust, which would also hold my liquid assets?
2) Also, no need for Land Trusts here?
Thank you in advance
Yes we typically use a WY LLC as a holding company for the WST. I did not discuss in the video.
Thanks for the great info. for CA investors!! We have a disregarded WY LLC that will serve as the GP for the 3 LPs we will set up. How would this be structured with the 3 Land Trusts we also plan to set up? How would the CA LLC be structured? Will any of these transfers affect the Prop 19 property tax changes happening soon? Thanks again for all of the super informative videos.
That is a lot to unpack. If you would like a FREE 30-minute consultation, you can request one here
- aba.link/30minSession
Very interesting and useful information. My question is where should I form disregarded LLP if I am a resident of Ca and I have a property in Georgia.
Georgia - where the property is located.
@@ClintCoons thank you!
If we ever needed to go to court and got asked why we have such an elaborate set-up, what is the correct answer? Is "It was for asset protection" a correct answer? I'm guessing that something like "I like to embark on different business ventures" might be more appropriate.
Business planning
Clint, great video as usual. What is the preferred partnership percentage between the limited partner and general partner when holding a Limited Partnership? Is it more like 99% for the limited partner and 1% for the general partner or does it not make a difference?
Yes that is the typical arrangement for this type of planning but in reality since it all flows to the same entity it does not really matter.
Hi Clint, Thanks for the content. Could you establish a management corp in California and lease your out-of-state properties to it via a lease agreement with the corresponding out-of-state LLCs holding that real estate? Then only the management company would have to pay the franchise tax?
I think ultimately you would need to register the LLCs in CA because they own CA real estate and lease the CA real estate. The fact the Lessess is your corporation does not change this fact. - sorry for the delayed response sometimes youtube does not notify me of the questions and I randomly find them when I am answering another question posed by a viewer.
Hi Clint! Thank you for such a great explanation! I have 2 questions though.
1. With multiple LPs and one LLC - should this LLC be created in California or other state?
2. When I rent my property to a tenant or list it on airbnb - should I do it as LP?
Thank you again!
The LP and LLC (GP) are both set up in CA. Thus, you will pay $800 for the GP LLC but that is only one $800 annual fee.
The LP will be the landlord.
@@ClintCoons But what about the asset protection value of having an entity in Wyoming?
WoW 🤩
Great video!
My question is does the LLC needs to be set up in CA? Then, the Franchise Taxes will apply to that LLC right?
That is correct
Hi Clint- awesome content!! Does this strategy still hold true today? I thought I read ALL LLC’s, LPs, etc are now subject to the $800 fee.
It does not apply to disregarded limited partnerships
The scary thing is, the CA FTB thinks it can make changes that apply *retroactively*.
Yes that is a risk. Another option would be a WY Statutory trust to hold your real estate. The statutory trust is not subject to the franchise tax.
@@nelsonsanabria3130 Each trust couldhold a property and all of the trusts would be owned by one LLC.
@@ClintCoons What is the cost to set up the statutory trust and what does it cost on an ongoing basis (assuming there's an annual fee)?
@@justindaniels6759 $3,000 and the annual fee is less than $300 (State filing fees and resident agent)
Hello Clint great video I was wondering if going the LP route can still provide anonymity and if LP is still an option in California
Yes and Yes
Hello Clint can you clarify... The general partnership llc and Wyoming holding company llc do those have to pay the 800 franchise tax each
Do you use the same disregarded LLC as the General Partner for all your LPs for each rental?
Yes
Hey Clint, I live in Michigan but am wholesaling virtually in California. I use the LLC method of selling the membership at closing as my exit strategy to avoid closing costs. My escrow agent gave me some good advice telling me I can file the LLC in Michigan which only costs $50. Last I heard it costs $900 in California. My question is do I have to file a foreign LLC in California on top of the domestic LLC to stay in compliance with the law?
You would file as a foreign LLC doing business in CA. See bpd.cdn.sos.ca.gov/llc/forms/llc-5.pdf
Clint, if the LP entity is owned by the individual owner and the LLC that is indirectly operated by the same owner, what happens with the tax treatment? Assuming it is all disregarded would it be Schedule E for passive income and Schedule C for non-passive income. Many thanks!
Correct.
Would we potentially lose any passive loss deductions (substantial if classified a Real Estate Professional) if we choose this setup vs an LLC?
No, provided you allocate all of the losses to the general partner or you set up a Wyoming Statutory trust.
Didn’t realize it was different in Cali
Welcome to the Great Nanny State of California!
I am talking to one of your advisors who is not familiar with LP even though I mentioned this video. How can I be in touch with another advisor or talk to you. Thx
Jas I see you are a Platinum client. I would be happy to speak with you. I will reach out to you via email to set up a consult.
Thank you for the best content on the subject!
What about putting assets into trusts, and then assigning those trusts to pass through single member WY LLCs that are owned by manager managed WY holding company which is owned by me? None of the LLCs even have a bank account and doesn't engage in any activity, only holding assets. If trustee of those trusts isn't the same as the beneficiary, will California want $800 for each WY LLC in a structure like that? WY LLCs aren't doing any business in California, trusts are, LLCs are only holding assets, so why California would want the money? Am I missing something, or would that work?
Yes you can do that. I have another video describing that exact strategy.
@@ClintCoons Could you please link that video? I watched many of your videos about trusts, but don't remember this one. Thank you very much!
@ th-cam.com/video/37YMkbMBrLI/w-d-xo.html or th-cam.com/video/OKPShUOUkj8/w-d-xo.html
Hi Clint. Do we still put the rentals into Land Trusts then use the LP as the beneficiary of the Land Trusts?
Depends on the situation so Yes or No.
Do we now also set up another LP to be the Trustee for the Land Trust?
Not an LP but a WY LLC
Hi Clint! Thank you for such a great video. I have a question.should I ask the tenants to write the check payable to the LP or to the LLC ?
LP
Thank you so much. I appreciate your quick reply.
Do I need to replace the existing contract that I had signed with the tenants as a sole proprietor to a new LP contact ?
@@Munasarts That or send them a letter directing them to pay the LP.
I live in Idaho but have 5 rental properties in California. Can I set this type of limited partnership up if I am single and the sole owner of my California rental properties? If not what would be the best thing a single person could do to avoid the California Franchise tax.
Yes but I think a Wyoming Statutory Trust would be better. Here is a link to the strategy: th-cam.com/video/pIBkhnqr8nc/w-d-xo.html
if you live in ca and have real estate in ca and want to invest out of state do you set up the disregarded limited partnership or the Wyoming holding?
Either a disregarded LP or a WST owned by a WY LLC
Hi, Clint, thanks for the content. Got two questions. 1. if one LP get a sued, since the GP is LLC which holding other LPs, does any other LP will be impacted by the law sued? 2. even LPs are setup as disregarded entity which will avoid CA FTB $800/year/each, does those LPs still need to file 1065 for federal tax return?
thanks,
Potentially but if you remove the GP from the other LLCs then this is not an issue. Also a creditor can only go after what the GP owns in the other LP and often times the ownership interest is .5%
@@ClintCoons Hi Clint, I've watched your videos and you are amazing. I wanted to point out that according to the ca corp code, "doing business" in the state means a general partner in a LP (a limited partner is not considered doing business) so I'd be willing to bet the state will want you to register that foreign LLC in the state in which case it would be subject to $800 min tax.
My thought is what about using a business trust as the GP? any reason you couldn't use a california business trust? ca business trusts don't have any filing requirements so the trust doc would remain private, right?
I'm confused bc in another video you said LPs file a 1065. If one has a limited partnership with his spouse, and the GP also consists of both spouses, does the limited partnership automatically become a disregarded entity or do you have to elect that status? Or, is it by default its own entity that files a 1065?
That is default but you can set it up as disregarded.
With this strategy, if there were an internal attack, the judgement will eventually be against only the GP, correct? The LP and the Trustee (of the Land Trust) are safe, correct?
Not at all. The judgment is against the LP and by extension the GP.
To reiterate, the judgement is against the Limited Partnership and by extension, the General Partner. The Limited Partner and Trustee are safe. (Pls confirm since the term "LP" was used to mean two different things)
Yes, absent some other claim the limited partners are protected from the debts and liability of the the limited partnership. A trustee is similarly insulated from claims against the trust.
Could the players (i.e. the member and the manager) of the GP LLC be liable for the GP's debts and liabilities? I'm guessing not so. Pls confirm.
How about this idea? Create one CA LLC. CA LLC leases the various units from the WY LLCs that own these units. CA LLC sublets the units to various tenants. One CA LLC --> one $800/yr fee. If a tenant sues his landlord, CA LLC has no assets.
You can always sue the property owner.
Ok. Thanks for your response.
So, the tenant sues the property owner which is the Land Trust with the WY LLC as the Beneficiary. Isn't that the same situation as the overall strategy propose? The WY LLC protects the human owner from losing his/her other assets since this internal attack is limited to this one WY LLC. This way, there is no need for a General Partner LLC or a Property Manager LLC. No need to have Limited Partnerships, either. Will this strategy work? If not, what's the downside.
Thanks again.
Do you set up Trusts and LLC's in other states (Florida, Tennessee)? How can you be reached?
If you would like a FREE 30-minute consultation, you can request one here
- aba.link/30minSession
In the past you have suggested a strategy of holding California property in individual WY LLCs, with each of those in turn having property management agreements with one CA LLC. Thereby all the California "business activity" is limited to a single LLC and a single franchise tax board payment. Do you still consider that a viable strategy? Or are you more encouraged by this new LP route?
This has been an internal debate amongst myself and my partners for the past several months. As I indicated in the video, the legislature could take up the FTB's current proposal to amend RTC 23038 to include disregarded limited partnerships. If this happens then the workaround is no longer viable. Another consideration is a Wyoming Statutory Trust. I am working on a WST that is disregarded for federal tax purposes but has springing provisions to have it treated as a grantor trust if required. This entity may be the solution to CA vexing appetite to tax everything a citizen owns. CA Revenue and Tax code currently exempts disregarded trusts and grantor trusts from the $800 per year. However because of the nature of the trust it must be registered with California. This is something many promotes are unaware of and their clients for whom they set up these structures risk the trust's protections for failure to register. As an added safeguard I am also building into my WST a spring LLC provision to protect against an ill informed judge ruling a WST does not provide creditor protection. This provision will allow you to convert your WST into an LLC if you believe the trust is in jeopardy. This was a bit longer response than I anticipated and I will definitely make a video next year with more detail once my WST and strategy is finalized. Thanks for watching.
@@ClintCoons thanks for your great response. I know between you and Toby you’ll come up with the best work around there is!
@@lisamcleanvanleigha4557 Thanks for being a valued client and participating on my channel.
@@ClintCoons I appreciate the thorough response. And it says a lot about your firm that you are actively working to find new, creative solutions, as well as acknowledging the potential pitfalls. It's an ever-changing world. Thanks!
@@ClintCoons cant wait !!!
Hi Clint, If we use a WY LLC as our GP for our California LPs (better outside protection than a CA LLC) can we also have that same WY LLC be a holding LLC for our LPs and other liquid assets or do we need another WY LLC? Thanks again.
You would need to file your WY LLC in CA if it was serving as a GP of a CA LP. You would never want your GP LLC to hold any assets. The GP LLC is fully liable for any claims made against the CA LP.
@@ClintCoons Thanks so much.
Does the general partner LLC have to be a CA LLC? Can a lawsuit in one LP jeopardize the other LPs in the general partner LLC?
No it does not but it will not matter because either way the protection will be the same and the entity will need to register in CA. As to your other question - if one LP is sued and the creditor goes after the LLC you can switch general partners on the other LPs to keep an aggressive creditor away.
@@ClintCoons would a Wyoming llc give you more protection from outside than a cali llc?
Hi Clint, here is my questions;
1. if we establish a WY LLC holding company and also establish a CA LLC for manager purpose. Which LLC should be our LPs GP? WY? Or CA? why or why not?
2. can we just setup a WY holding LLC for our CA LPs GP ?
Thanks!
You will use the CA LLC as the GP. The CA LLC serving as the GP is conducting biz in CA and must register in the state. Yes the WY LLC can be the single member of both the CA LP and LLC
@@ClintCoons Thank you for your quick responds
We would like to know if we can skip the CA LLC and used WY LLC as our CA LP's GP? (we have multiple CA LP)
@@jimmyliu6976 Yes but it will need to be registered in CA
@@ClintCoons Thanks!!!
If I use the "LP as a disregarded entity" strategy, I can still set up the WY LLC (which is acting as the GP) as a partnership, with the purpose of filing a K1, right?
Not necessarily. You would need to make the GP LLC disregarded to another holding LLC that is the limited partner of the LP. Thus, you will have 2 LLCs that must pay $800 however, the LPs could be set up as disregarded to the holding LLC in this scenario. Option #2 set up a Wyoming Statutory Trust disregarded to a WY holding LLC taxed as a partnership.
@Mehedi Hasan Yes you must pay income tax on US based income.
Thanks for the info! Under the Wyoming statutory trust strategy, who is the member of the trustee LLC? If the member is a CA resident, then wouldn't the trustee LLC be subject to the franchise tax?
Yes that is correct or you make the WST the member.
@@ClintCoons Thanks so much for your response! That's exactly where I got stuck - if you're forming the WST to be a member of the LLC it becomes circular because I can't form the LLC before I form the trust cannot be the member of the trustee LLC. Is the strategy then that you would just pay one set of franchise taxes for the trustee LLC, then?
@@ashleynance2712 Correct
How would this work with limited partner investors of the LP who are not part of the LLC?
You would need to set up a separate entity with your investors (LLC) - make it a 99.5% owner in the LP and set up a second LLC as the GP and have it owned 100% by the investor LLC.
ok, i will be living on a property that my brother and i inherited from out mother. it is owned 50/50 by each of us. what would you charge to set up this structure for us in california ? we're not wealthy but can see doing something like this for reasonable fees.. we're hoping maybe a few thousand, not 5-10k in legal fees...
Reach out to my assistant dlewis@andersonadvisors.com and we can discuss. The fee is far less than 5k for one entity setup.
Great content and well explained, however being a CA resident, it kind of Sounds like BS to me...
In what way?
In this video (th-cam.com/video/dzEXOliec88/w-d-xo.html), you mentioned creating a separate LLC for collecting rent. With this new strategy, is it now your recommendation to use an LP instead of an LLC for the entity that collects rent?
Probably not needed but every situation is different so it really depends on the overall structure and what the client hopes to accomplish from a tax and asset protection perspective.
As of today, are limited partnerships still free from the $800 franchise tax fee?
Only disregarded limited partnerships
question if I went with the Wyoming trust to avoid the yearly 800$ LLC fee would it still offer me the same protection as if I had set up an paying 800$ LLC ??
Yes the WST offers protection from lawsuits derived from the assets it holds.
@@ClintCoons You mention your not sure how the court would recognize it being in California how they would they treat that trust from an asset protection standpoint?? I know you did the video a year ago so I don’t know if you happen to have some current info to avoid being the guinea pig
Hey Clint, can a WST do business with credit unions in other states?
Not sure.
I've been watching a number of your videos, and they're fantastic. Thank you so much; I've learned a lot. I would like to ask you a question.As a general partner for my Limited Partner, I formed an LLC. ( husband and wife). Given that both are disregarded entities, what percentage do you suggest I give to my LLC on paper? (Agreement )
What is the purpose of the LP?
@@ClintCoons they are two separate LPs one for a rental property and one for a farmland.
I want to clarify that they are for protecting my personal assets (liability ).
@@Munasarts I would give it a small interest - probably 1%
@@ClintCoons Thank you so much
will this work with one single person as the LP and also as the 1single person LLC as the GP?
Correct
I’ve spent over $10K on your services and setting up LLCs by the dozens that cost me $800 in California argh!
Lisa keep in mind there is no guarantee the legislature will not change the RTC to include disregarded limited partnerships. Also, as frustrating as it is paying the $800 per entity consider how you might feel in the event of a lawsuit. The $800 is 1.5 hours of attorney defense time and it will only go up from there. Because you have elected to separate out your assets you have minimized your risk of loss and preserved your wealth. Please look at my response to DannyBGoode1. If you are thinking you want to minimize these fees we may have another option for you in 2021.
@@ClintCoons I totally understand Clint - your advice moves with the legal landscape changes. It’s CA that I’m frustrated with. Have their hands out at every turn with no help from their other.
I live in CA. If my living trust is manager or member of an out-of-state LLC, will that LLC also be subject to the CA franchise tax?
Yes according to CA. Its crazy.
@@ClintCoons If that is the case, I don't see how using PPTs or WY Holding LLCs as you mention if your other CA structure video will help CA residents get out of paying double franchise taxes then. If anything, it will only add to our taxes. The WST route doesn't seem foolproof either.
8:09 Would it be better to use the WY LLC Holding Company as the LP instead of the husband and wife? What is the advantage or disadvantage with doing so?
You could use a different LLC as the LP but then you will be paying 2 CA franchise tax fees. One for the LLC serving as GP and one for the second LLC serving as the LP.
From one of your videos, you mentioned that a Holding Company (e.g. a WY LLC) is the first entity everyone should set up. From there, ownership of stocks, bonds, cash, and subsequent entities would belong to the HC. Then, this HC would be owned by the husband&wife or the Living Trust. Is this still a recommendation? Thanks.
@@alpinewhite Yes
So, can this Holding Company (a WY LLC that we should all have) be used as the LP for the Limited Partnership? Would this WY LLC need to register in California for the mere reason that it is an LP?
@@alpinewhite No but it will pay the $800 franchise tax
Can I use this strategy to build single owner California structure for any business other than real estate holding? I just want to avoid the $800 every year:)
Yes but you will pay tax on our business income.
EXCELLENT Content Clint! Very Informative!! Thank you!!!
I got a good one for you:
for California residents:
- Can a California resident put her Wyoming LLC (already existing Parent LLC of a Florida LLC, that in turn holds property through a Florida Land Trust) into a Wyoming Trust and avoid the dreaded annual $800 CA tax? Or will California tax both the Wyoming & Florida LLC?
- Can the Trustee of the Wyoming Statutory Trust be another Trust, say a management Trust? or does it have to be an LLC?
Yes the WST will prevent the $800 in your scenario but using a trust as the trustee may not give you the anonymity you are seeking because the second trust, if not a WST, will list the trustee in the trust name i.e., California Kars as Trustee of the Plymouth Superbird Trust.
does a CA resident still have to pay the $800 for the LLC that is the GP of all the LPs?
Yes. You cant get out of all the $800 payments but consider this - you set up 5 CA LPs and one LLC. Your total Franchise tax is $800 for all 6 entities.
Clint, if everything is disregarded doesn’t that tell creditors that you are the sole owner of the Wyoming LLC that happens to own the California LLC? So wouldn’t that give them reason to believe they could go after the California LLC as well since you are the real owner and they can link it to you?
Steve I do not follow your question. A creditor would only have the ability to place a charging order on the entity you own not the upper tier entities.
@@ClintCoons the entity you own is 100% owner of the second LLC. So once they know that to be 100% true wouldn’t it trickle down to all LLC? Example. True LLC is owned 100% by T-bird LLC. And T-bird LLC is disregarded. So it being disregarded it tells everyone that it has only one owner. So if you are traced to be the owner. And it owns true LLC wouldn’t that be technically pointing directly at you and wouldn’t a creditor by able to fight and try to get that interest once the anonymity is unveiled?
Also I love the education you are providing thank you. Can I get a job?walking billboard for a 100$ dollar monthly salary, with percentage bonus for referrals?
Also how many referrals to become partner? Only want 5% of Anderson.
Something to work forward too.
@@Zerokool55 Hah! Regarding your question - if you are sued and a judgment is entered against you then yes a creditor will be able to discover your overall structure during a debtor exam. Absent this occurring the tax status of T-Bird does not have any impact on whether a person can discover your membership in T-Brid and its upper-tier entities.
@@ClintCoons thank you for clarifying this 🙏
if i set up my LLC in wyoming (GP) and my LLP in california then I (LP) should be free of any franchise tax correct?
No the WY LLC will have to pay the franchise tax. Keep in mind the WY LLC will serve as the GP for all of your LPs so you will only pay one franchise fee.
Thank you.
How did California investors have anonymity before you found this strategy? The Beneficiary LLC would have to be registered in California, right?
No it does not have to register in with the CA secretary of state.
I'm confused. Didn't you mention elsewhere that the Beneficiary LLC needs to register in the state where the rental property is. This is to be able to enforce the Lease Agreement with the tenant.
In one of your comments in this video: th-cam.com/video/dzEXOliec88/w-d-xo.html
Why a statutory trust? Why not a common law business trust? It my understanding a common law business trust even in CA has no 800 fee, no registered agent. So what this ?
A WST is treated similarly.
Couldn't you use a statutory trust or common law trust and put real estate or other property in the holding company.
Yes
Is that $800 charged when you open the LLC or when you purchase the property?
When you open it.
3:30 'WY LLC" will also need to be in CA. You already exposed yourself?
Can I create a LP as a Single individual?
Yes provided you also use another entity.
If you live in CA and have WY LLC as the beneficiary of a land trust with CA property in it. Does CA want $800 form you?
Unfortunately yes. Many investors who use the setup you describe do not pay the $800 on the WY LLC because it has no activity in CA. This only works if the WY LLC is a disregarded entity. If that concerns you then consider using a WY Statutory Trust to hold your WY LLCs.
So it's unlikely that California will find out about disregarded WY Holding LLC and demand $800 for every year you had it, even if technically you have to pay it, right?
Disregarded entities do pay $800 in California, don't they?
Yes they do
Do I need an EIN number for Wyoming Statutory Trust
Yes you will want to obtain and EIN
Clint, if you are a retiree in California with rental properties in California what is your position on using a Private Retirement Plan per CCP 704.115 instead of LLCs/LPs?
It's no different than setting up a solo 401k. This concept comes up every so often and the individual has a plan to move significant assets into the plan and protect them from creditors. Such a strategy will probably not work (see this link on the topic www.martindale.com/trusts-estates-law/article_Law-Office-of-Dennis-A-Fordham_1195318.htm) . Further, if you own real estate inside of the plan a tenant can sue the plan so the plan will need to utilize LLCs to protect its assets from lawsuits.
@@ClintCoons Yes. After further review it’s my understanding that if the primary purpose of the plan is to protect assets and not a bona fide retirement plan, courts won’t honor it. There’s also case law to support this.
Can you have a lp with just one person?
Yes you can if you use a disregarded LLC as the GP - assuming you want to avoid the CA franchise tax
All to save $800 Franchise Tax Board fee? ...
Yes that is the size of it.
How do you avoid paying 800 on the disregarded LLC? Isn't this a CA LLC?
The LLC is a WY LLC as the trustee of the trusts. You will pay $800 on the LLC.
@@ClintCoons Thank you!
In the video (th-cam.com/video/N4UjEL9fBdQ/w-d-xo.html), you mentioned that a strategy using LLCs, holding companies, and partnerships does not work for a personal residence because we need to be sensitive to things such as homestead exemption. But in this video we are in now, you mentioned the use of a Limited Partnership. Is this new strategy (that is specific to California residents) what you also recommend for personal residence in California? If so, do we structure the personal residence to be the same as that of rental property (i.e. property -> Land Trust -> LP -> HC)? Thanks in advance.
I was not referring to a personal residence tin this video. This video is all about investment property.
Is it still your recommendation to use a Disregarded WY LLC as the Beneficiary of a Land Trust for a personal residence in California as shown in this video (th-cam.com/video/N4UjEL9fBdQ/w-d-xo.html)? Thanks, again.
It would depend on the situation.
For Californians, who should be the beneficiary of the land trust for the principal residence?
@@terrycrawford6740 The individual homeowners.
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This is incorrect. Little knowledge as this guy has is a dangerous thing. Beware. The concept of a "disregarded entity" primarily applies to single-member limited liability companies (LLCs), not to limited partnerships. A limited partnership typically involves at least two partners and cannot be a disregarded entity for tax purposes in the same way a single-member LLC can.
All limited partnerships in California are subject to the $800 minimum franchise tax, even if they have minimal income or activity within the state. This requirement is in place as long as the limited partnership is registered with the state, regardless of its income or the tax classification it might have for federal purposes.
Maybe before you weigh in look up what I am referring to and educate yourself on the actual law. I will give you a head start - here is the California Franchise Tax Legal Ruling that recognizes disregarded LPs and exempts them from the franchise tax.FTB Notice 2019-06 (www.ftb.ca.gov/tax-pros/law/ftb-notices/2019-06.pdf)
Couldn't you use a statutory trust or common law trust and put real estate or other property in the holding company.
If you did you are basically placing all of your real estate into one LLC. Best to use separate LLCs to hold the trusts.