In TX, if you own 60% of a corporation, you can liquidate it. That means you have to own 40% or less to be protected. Hope you trust the person you give 60% to. J
C-corp taxation has different tax effects that S-corp. I can see benefits to both.
From: OptionClub@yahoogro
Sent: Thursday, May 06, 2010 1:16 AM
To: OptionClub@yahoogro
Subject: RE: [TheOptionClub.
I too live in NV and have set up a corp here for the reasons John pointed out. There are many people that have corps here with virtual offices and never live in the state. Do a goog search and you’ll find plenty of people that offer this service…..but I’ve never found one that specializes in trading.
Its best to not to be sole owner of a corp because you can easily be sued and have the corp’s assets be tapped. You need to have a corp where you have a 99% stake and someone else a 1% stake. In NV the rules change drastically when there two or more in a corp.
You can also set up an LLC and have it taxed like a C-Corp…don't know why you’d want to but you can.
Rich
From: OptionClub@yahoogro
Sent: Wednesday, May 05, 2010 6:19 PM
To: optionclub@yahoogro
Subject: RE: [TheOptionClub.
I started to answer this but realized that I'm wasting valuable time on a subject that is better researched by interested individuals through REAL EXPERTS that know what they are talking about. My only point in the very beginning and now is to try & get people to understand that not everyone needs or should set up an entity, but they do need to research the subject for themselves with people they consider COMPETENT & then make their own decision based on their circumstances. I can put this time to much better use in the stock market & the real estate market.
One point though, just for the sake of showing your knowledge, I live in the state of Nevada & have for 26 years. Nevada has NO state income tax & NO corporate tax. That is one of the major reasons that many, many well known, major corporations move to Nevada every year.
To: OptionClub@yahoogro
From: jack@jackcpa.
Date: Wed, 5 May 2010 17:34:34 -0500
Subject: RE: [TheOptionClub.
Whoa, back the truck up.
A corporation is NOT going to protect your assets if you are sued personally. Your stock in the corporation is subject to being seized by the creditors just like any stock you owned in GM or IBM. They will not need to ‘pierce’ the corporate veil when they own the corporation. L
Corporations pay state income taxes just like individuals. Their tax is often prorated based on the assets or payroll or sales in each state. If you live, vote, own r/e in a state, I suspect the state will argue that any trading you do is subject to state income tax.
DE and NV have lax rules about different types of stock. And about voting, etc. There is a big difference between the handling/taxation of big corps vs. one man shows. If you are sued in your home state (or the home state of your attacker), that state’s laws are going to determine whether the corp is pierced.
Great, put him on the corp payroll – and pay $700 a year in SS taxes? If you paid him as an individual, there would be no SS taxes. J
Yeah, right. What makes you think the lawyer has any assets? His are probably all in his wife’s name. J
Actually, I understand the best liability protection is from a limited partnership – they cannot take your LP interest, all they can do is get a charging order – which makes them liable for your taxes. J
I know, there are a lot of war stories out there where a corp “might’ have protected the individual. What I want to hear are the stories where a corp DID protect the individual. J
I am not a lawyer either. To be such an easy going guy, I just realized I sure do know a lot of lawyers. L I used to be a CPA. I have set up a lot of corp’s and LP’s. Fortunately, I never had a client need that liability protection. J
From: OptionClub@yahoogro
Sent: Wednesday, May 05, 2010 9:27 AM
To: optionclub@yahoogro
Subject: RE: [TheOptionClub.
It's not about liability protection, it's about asset protection when it comes to trading. If your trading as an individual and gfety sued over an auto accident or some other type of incident, you could lose your trading account in a heart beat. How much insurance will protect you personally? Pick a number. As a licensed insurance investigator for the past 30 years I've seen more than my share of people who lost everything they had because they didn't have sense enough to talk to someone who knew how to protect their assets, ie, an attorney who specializes in asset protection or a KNOWLEDGEABLE insurance agent. And as with all things, all attorneys & insurance agents are not created equal.
Second, your right, at a personal level you probably would be sued in you state of residence for a personal liability situation, however if your corporation comes into play in any way, shape, or form, the laws of the state of incorporation are the laws that apply as far as getting to the assets of your corporation. And in NV as I believe is the case in DE, it's almost impossible to get at corporate assets unless the corporation itself is liable for what ever action your being sued for and then the only protection will be insurance, which is still highly recommended.
Third, how does someone tell what state a person is trading in, if your corp is registered in NV, or DE, or whatever state, & you have a resident agent, & an address and phone number in said state where are you doing business?? Right now I am in the state of WV on extended vacation, I am of course still trading everyday, am I doing business here? If what you think were true then I can't imagine why there are so many MAJOR corporations that file their corporations within the states of NV & DE. No one is suggesting you won't have to pay state taxes on YOUR income, (your net trading income from your LLC goes onto your personal return) but among the benefits of a corp are that you can move a lot of your income to the corp & the state of NV has no corp income tax nor any personal income tax for that matter.
Fourth, I wasn't suggesting writing off a car, unless of course your into real estate investing, in which case a car can be easily written of as a business expense, the same way I do in my investigation business that is managed by my Corp. What I had tried to illustrate was that IF you were going to buy your kid a car anyway, why not put the kid on your payroll, so you could write off the car payment as salary. If the dollar amount stays under a certain amount (it was $4500 when I incorporated)
And on the plus side, another great reason for using an experienced attorney for these type of things is that if they give you some bad advise or put you into legal jeopardy you can always sue them for malpractice.
And finally let me say, first, I am not an attorney so nothing I have written here or in past posts should be construed as legal advise. The point of all of this has been that as in all cases, one size does not fit all but how do you make an educated decision without looking at all the facts & possibilities? Legal issues and asset protection are not things to get advise from Aunt Mary, your barber/beautician, next door neighbor or any other non-professional. Do your own research, talk to professionals who specialize in investors, maybe talk to more than one, but get the necessary information to make an EDUCATED decision as to what is best for you and your situation. As with insurance, the time to find out if your insurance is any good and covers what you need covered IS NOT when you have a claim.
In closing, let me say I did not post to this thread to start any big controversy, I was only trying to point out because some people have formed corps or LLC's & it didn't work out for them, or someone got some information that indicated it wasn't worthwhile to trade as an entity, should not take that as gospel. And the same goes for having talked to someone who has benefited from trading as an entity, IT ISN'T FOR EVERYONE. As I said above, anyone looking at the subject of liability and/or asset protection should do their own research & make their own decision based on their circumstances and FACTUAL INFORMATION. Trading has virtually no liability exposure but if you build a large account you have a large asset exposure. Real estate investing on the other hand as well as most other business have large liability exposures as well as asset exposure. Insurance can only go so far to protect you, you need to be sure your protected in other ways as well.
John Sheldon
To: OptionClub@yahoogro
From: jack@jackcpa.
Date: Wed, 5 May 2010 07:15:54 -0500
Subject: RE: [TheOptionClub.
First, how much liability protection do you need for a ‘trading vehicle’?
Second, you will likely be sued in your state of residence. If you do not live in NV, I doubt the NV laws will have much protection. L
Third, if you are doing business in another state, you are ‘supposed’ to register as a foreign corporation – and pay taxes in said state. (Probably can get away with that since you are not advertising, don’t have an office, etc.)
Fourth, a lot of the ‘tax benefits’ of incorporating, (write off a car – especially a kid’s car, hiring your kids, etc.) are getting on the dark side of the gray area. If audited, you will likely lose that ‘benefit’. On the plus side? I don’t think it would be considered fraud so you are unlikely to go to jail.
From: OptionClub@yahoogro
Sent: Monday, May 03, 2010 10:57 PM
To: optionclub@yahoogro
Subject: RE: [TheOptionClub.
The protection is on a state by state basis, you are still protected in Nevada (which is a reason to inc in Nevada) as well as one or two other states.
John S
To: OptionClub@yahoogro
From: rvdidit@yahoo.
Date: Mon, 3 May 2010 20:37:39 -0700
Subject: Re: [TheOptionClub.
| I heard somewhere that asset protection really depends on what insurance you have. > |
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