Re: [TheOptionClub.com] LLC?

 

Janet,

  Thank you for posting this. The same thing happened to me at it was very costly to get rectified. The Wealth Preservation Seminar was a tacked on seminar after attending an very overpriced Options trading seminar. The only thing I could figure out was they were taking advantage of "newbies" like I was at the time. Anyone thinking of this should really check out all the details. From my experience, only a very active and experienced trader can make out with a C Corp and an LLC. 

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From: janet_earnest <janetearnest@gmail.com>
To: OptionClub@yahoogroups.com
Sent: Mon, May 3, 2010 2:29:45 PM
Subject: Re: [TheOptionClub.com] LLC?

 

I'd strongly suggest you check out the profitablity of this before proceeding. It may be profitable for some but it certainly wasn't for me. I'll share my story in hopes that it will provide guidance so others may not also get suckered.

Back a couple of years ago, when I was a newbie and still very gullible (well at least more gullible than I am now), we went to a seminar for traders concerning asset protection etc. After 2-3 days of presentations, we thought it prudent to form a corporation and LLC to better handle taxes on trading gains. It cost us several thousands of dollars to get all the legal stuff set up. Then I had to figure out all the additional reports etc that had to be created monthly/annually for the C corp and LLC to operate legally. Ok, that was kind of a pain, but worth it if it would provide tax benefits etc. So, about a year later it was time to file the tax returns. So we met with an accounting/tax firm specializing in such things. They informed us that we would probably spend more on taxes using the C corp/LLC structure than just trading as an individual. And guess what, when we got our tax return from them, that proved to be the case. However, I knew better. Armed with all the information that the law firm provided, I just knew something wasn't right. So I spent weeks digging into tax forms trying to figure out how it could be reported differently but still appropriately. Well I'm certainly no tax expert but I couldn't find a different way of reporting. I even did some what if's such as what if I had much better gains - still no better - I'd still pay more taxes than as an individual. So we contacted the law firm that set this up for us. After some rather heated discussion, we were left with three choices -- 1) Use an accounting firm that they recommended that could provide tax forms that would make it profitable 2) Spend more money with them to re-structure our C corp and LLC(remember they are the ones that set it up initially for trading purposes) 3) Close the C corp and LLC. Options 1 and 2 didn't pass the smell test with us so we chose option 3. It was an expensive experience for us which included expenses for setting up the LLC etc, more taxes than otherwise would have been required, payment to the accounting firm to prepare taxes (can now do ourselves), and payment to close down the LLC. There was also a large amount of time and energy spent on this whole process which could have been better spent elsewhere.

So I'd recommend you check it out thoroughly - it might be that it works for you - it evidently works for some.

--- In OptionClub@yahoogro ups.com, "Jack" <jack@...> wrote:
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> A LLC is essentially a corporation, although some may ‘choose’ to file as a partnership.
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> A corp would file a 1120 or 1120S tax return. A C corp files an 1120 and pays taxes, an S corp files an 1120S and passes through any gains/losses to the shareholder( s) who pay taxes.
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> Any accountant should understand that.
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> Do you mean an LLC taxed as a C corp???
> A tax lawyer recommended this to us, but then spoke to an accountant who had
> no idea what that meant... Puzzled now
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> _____
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> From: john sheldon <johnlsheldon@ ...>
> To: optionclub@yahoogro ups.com
> Sent: Sat, May 1, 2010 8:35:35 PM
> Subject: RE: [TheOptionClub. com] LLC?
>
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> I trade under an LLC & have a corp that manages the LLC to obtain more tax benefits.
>
> John S
>

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