All Forum Posts by: Michael Plaks

@Brian Bradley

Once again, and the last time, I'm not relying on anything. I'm asking attorneys for their professional opinion. You have one, other attorneys have theirs. I'm learning from all.

@Brian Bradley

I have no problem with Series LLC, particularly Texas Series LLCs in my state. My clients use them. You don't need to convince me of their benefits, as I'm not against them. The cost saving factor is important, and it is the primary reason I support them.

@Joseph Lucas Jr, the original poster, was considering forming a Texas Series LLC and using it for his AZ business. I thought it might not work as intended (and still think so). But I'm an accountant, not an attorney. So I asked a legal question, hoping that attorneys like yourself would clarify it. Regrettably, you continue with personal attacks.

If I understood your position - you're saying that AZ or any other state would simply honor the statute of the state where the Series LLC was formed, Texas in this case. I doubt so. Apparently, I'm not alone in my doubts, as these lawyers specifically said:
"1) Choice of Law. If a series LLC is sued by a third party in a state that does not authorize the formation of series LLCs, then it is possible that the law of that state would be applied. If that state does not respect the liability shield of the series LLC structure, the lawsuit could potentially put the assets of all series and the master LLC at risk. " http://huckbouma.com/blog-149-Series+LLCs%3A+Could...

You're also recommending creating FLPs, DSTs etc. These vehicles certainly have a place in asset protection, estate planning and tax planning. However, they're complex and expensive and need to be justified. I believe you and I agree that cost is an important factor. So, recommending them should probably come with a disclaimer of when it is and when it is not justified. 

I'm OK with grey areas. In fact, I recommend to my clients that they take advantage of the grey areas. You mentioned risks. The risk of taking a grey deduction is maybe having to return it to the IRS. The risk of not taking it is forfeiting your hard-earned money.

Where I have a problem is the black areas, as in reckless advice to deduct your groceries, deduct your clothes, deduct your vacations etc. 

PS. Of course, I'm all for hiring a professional, like you suggested. I have bills to pay. :)

@Shodhan Patel

I cannot understand your situation, sorry.

Seems like you have two properties - one where you live and another one where you have a tenant.

• Hazard/flood insurance on your own home - not deductible
• Hazard/flood insurance on your rental home - deductible against the rental income
• Umbrella insurance - deductible against the rental income, assuming it was purchased to protect you fromlegal liability related to your rental property (tenants and contractors)
• Renters insurance - cannot answer until I understand the "since we don’t own the current home outright in my name" part.
• Car insurance - not deductible.

You absolutely do need to split the payments into deductible and non-deductible portions.

@Brian Bradley

No need to get personal with people you don't know.

@Brian Bradley

These colleagues of yours seem to disagree:

https://eminutes.com/does-a-series-llc-provide-extra-protection-against-piercing-the-corporate-veil

And unlike you, they site some research, not just proclamations. 

Maybe you're right, and they're wrong. I can't tell.

It may be possible for you to qualify, but we cannot make this call thru an online discussion. This is something for an in-depth consultation with a tax professional.

Some pointers - but there is more than these, it's only a start.

1. You would need to spend more time in real estate than in your catering business.

2. That time has to be documented with a detailed ongoing time log.

3. It has to be time of actual work. For example, time you spent reading discussions on BiggerPockets may not qualify.

4. It has to be  your time, not your husband's.

5. It has to be over 750 hours per year, combined for all properties.

Again, there's more to it. Don't skip a tax professional's help on this one. RE Pro claims are very regularly audited by the IRS.

@Brian Bradley, you misinterpreted @John Hyre's question. I care, because I'm also interested in an answer to his question.

He asked: how does one Series LLC with 5 Series provide a better protection than five separate non-Series LLCs? The only advantage of a Series LLC over multiple non-Series LLCs seems to be the cost. Any advantage from the legal protection angle?

Don't know where you found sarcasm in my question, @Brian Bradley. 

And I do not believe you answered the question. The question was: if I form a TX Series LLC which is doing business in AZ, and I get sued - will AZ treat it under Texas law (i.e. each Series is a separate entity) or under AZ law (i.e. all combined)?

You referred to reciprocity - which I'm not familiar with, in legal context. Are you saying that AZ courts will spend time researching TX statutes and afford me an equivalent protection? I doubt it - which is why I'm asking you lawyers.

@Joseph Lucas Jr

My comment below is a question, not a professional advice, because I'm not an attorney and am not qualified in legal matters. 

From a layman's perspective, if I have properties in AZ and am sued by a tenant - would not I be going thru AZ court system to defend myself? If so, why AZ courts would care about the TX or NV statutes at all? Would not they simply treat it under the AZ statute and therefore ignore the Series aspect of that LLC? Thus negating any benefits of my setup? Interested in an attorney's answer to this one.

Also, from what I understand as a non-attorney, FLPs (family limited partnerships) suggested by @Brian Bradley are very complex and expensive and would be an overkill for most small landlords with modest net worth and no estate planning needs?

@Brian Bradley