CorporateDIrect FullLogoWhiteLetter

800-600-1760

Corporate Opportunities

Corporate Opportunities

Does the Rule Apply to Real Estate? If you invest in and/or syndicate real estate what are the duties to your investors? You owe them a duty of loyalty. But how far does that go? The issue of corporate opportunities is important. I wrote a whole chapter on it (from...

Checkbook IRA

Checkbook IRA

A recent case has shed light on one of the riskiest retirement plan strategies put forth by promoters. In McNulty v. Commissioner (157 T.C. 10) a U.S. Tax Court brought clarity to the scheme of using self-directed IRAs for personal investments.

Piercing the Corporate Veil – How to Avoid It

Piercing the Corporate Veil – How to Avoid It

50% of piercing the veil court cases nationwide succeed because owners are failing to properly follow corporate formalities. This exposes business owners to personal liability - meaning they can lose their possessions. What is the Corporate Veil? What is the corporate...

Are You Buying A Home With All Cash? Here’s Why You Should Reconsider

be prepared for scrutiny with large cash purchases

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.

Corporate Opportunities

Corporate Opportunities

Does the Rule Apply to Real Estate? If you invest in and/or syndicate real estate what are the duties to your investors? You owe them a duty of loyalty. But how far does that go? The issue of corporate opportunities is important. I wrote a whole chapter on it (from...

Checkbook IRA

Checkbook IRA

A recent case has shed light on one of the riskiest retirement plan strategies put forth by promoters. In McNulty v. Commissioner (157 T.C. 10) a U.S. Tax Court brought clarity to the scheme of using self-directed IRAs for personal investments.