The CTA requires both companies and beneficial owners to submit a report to the Department of Treasury’s Financial Crimes Network (FinCEN). Both requirements are discussed below.
Doctors are frequent targets of medical malpractice suits. This is why many of them have malpractice insurance to cover these claims. But what happens when the insurance does not cover the full amount?
Members can own different ownership percentages in an LLC. Generally, ownership percentages are based off the member’s capital contributions.
Are You Buying A Home With All Cash? Here’s Why You Should Reconsider
Are You Buying A Home With All Cash? Prepare to Be Scrutinized
Buying a home with all cash has become more difficult. Blame the drug dealers, criminal networks and tax evaders for new rules put forth by the U.S. Treasury Department’s Financial Crimes Enforcement Network (or Fincen).
Title insurance companies must now identify a 25% or greater owner of an LLC or corporation that purchases a home for at least $300,000 using all cash or crypto currency. The rule applies to 22 counties nationwide, and the list keeps expanding. It started in Manhattan and Miami. Now the counties in and around Los Angles, San Francisco, Boston, Seattle and San Diego, among others, are also included.
Of course, there are good and legal reasons for using an LLC to hold title to real estate, including limited liability, privacy and estate planning strategies. And many will use bank financing to leverage the advantages of real estate investment. Using a mortgage as part of the purchase does not subject one to the new rules.
Another gap in the law involves the use of trusts. Holding title in the name of a revocable or irrevocable trust is not subject to reporting either. While using an irrevocable trust for real estate holdings may not be the best tax planning strategy (talk to your CPA) many targeted persons may consider this option.
Another strategy will simply be to purchase real estate outside one of the 22 identified counties. Drug dealers already like Eureka, California, in the heart of the marijuana grow zone. The rules don’t apply there. Yet. Experts expect that the rules will someday apply to all real estate throughout the United States.
If you are not engaged in any sort of criminal activity should you be bothered by these rules?
Fincen collects the information on true ownership of the LLC or Corporation. This is added to their database, which they assert is not public. However, once you are in the database anything they deem as “suspicious activity” is scrutinized. Using cash transactions of over $10,000, or a number of $9,000 cash transactions, can put you in Fincen’s crosshairs. What then?
The government certainly has an interest in going after criminal activity. But, as always, broad rules can lead to unintended consequences.