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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