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(NYPost)   Rich 'Dad,' bankrupt Dad   (nypost.com) divider line 139
    More: Fail, Rich Dad, letter of intents, Kiyosaki  
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11246 clicks; posted to Business » on 10 Oct 2012 at 12:36 PM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2012-10-10 07:56:00 PM

Rent Party: I don't have to manufacture anything. That is the business. The business generated no revenue and operated at a loss. Operating a business badly isn't fraud.


Unless that business operates for more than 3 years with a loss. The IRS then considers that business to be a hobby by default. Good luck convincing a judge that it's a real business.
 
2012-10-10 08:07:08 PM

secularsage: Given that the author is largely selling advice on an unsourced story he probably made up about the "Rich Dad" and the "Poor Dad," I think it's a fitting end.


This. I started to read that book, and immediately he pissed me off the way he pissed on his real father ("poor dad") in favor of his buddy's dad ("rich dad"). So I wandered off and read something else instead.
 
2012-10-10 09:04:26 PM

big sugi: Anybody who thinks that an LLC is going to protect them from personal liability for crashing a car they're driving, or a plane they're piloting, is going to be in for a very rude awakening. You're still responsible for your actions. If you crash a rental car and kill someone, the lawsuit's not going to be limited to Enterprise. Even as asset protection, it won't be that helpful.

Now, putting houses and other profit-generating assets into an LLC is a very different scenario. That generally will limit the available recovery for premises liability and most types of negligence, which is the major concern of a property owner, and it's effective against some forms of contractual liability.  Even there, though, any intentional torts are going to hit you directly. For example, if you rig up spy cameras in the bathrooms, the fact that you rented out the house through a shell corporation isn't going to protect you personally from an invasion-of-privacy claim.



The legal principle they'd use to get the court to disregard the LLC is called "Piercing the corporate veil." No jury on earth is going to believe that your LLC, of which you own 100% and which conducts no business but contains all of your valuable assets, is really a seperate legal entity.

Besides, if all of your plane, car, boat, etc are in an LLC, and someone is injured in an accident with one of those, I would think the theory of liability would be be stronger against the LLC, which owned the sports car that crashed into them, or whatever, and which authorized some yahoo (you) to operate it. I'm also guessing that the LLC has the insurance on these items, which is where the real money is.
 
2012-10-10 10:12:13 PM

xynix: ghare: Annnnndddd they'll use statements like this to go after your assets to prove the LLC is fake and is actually a personally owned thing.

Yeah, this. They'll look at these various LLCs that seem to do nothing except own things that a person normally owns, and then the jig is up.

Uhh no. An asset protection trust removes ownership of the assets from the owner and puts them into the LLC that's under the trust. This is a very common way to protect assets from creditors or those that wish to sue you for your personal assets. In this sue happy society you're simply dumb not to build a APT. Especially if you have a legitimate business like I have where I own some houses I rent out.

However it won't protect your credit as you're still using your own credit, generally speaking, when you're using an LLC for real estate. An APT should not be used if you plan to file bankruptcy anyway. It's not for that, it's for asset protection against people that would sue you. Some states do allow for total asset protection from creditors using an APT though.. it's state to state. It's also up to the judge and if you were to form an APT/LLC just prior to filing it will get shredded. If you've had the APT for decades then chances are you'll be fully protected.

Example of how an APT works: I had a bad flying day and ran my plane into a house killing a person inside and of course me. That family decides to sue my estate however they would only be able to sue the LLC in which the airplane is owned. They would not be able to touch any of my other assets and especially not the trust which will instantly move into my sons name (don't tell him that).

Certainly a very good lawyer may be able to take some parts of the trust that pertain to personal assets if it's revocable but that's why you make an irrevocable trust. (Talk to a lawyer)

Either way something tells me I'm going to believe my lawyer, who I've know for decades, over the mouth-breathers on Fark.


Sounds great, but what was that voice mail that I didn't listen to the other day, the one about my dad dieing 10 years ago and my inheritance. Where did it go?
 
2012-10-10 10:14:12 PM
No, not that one. The one I didn't know about, and won't go looking for. THAT ONE
 
2012-10-10 10:17:17 PM
"'Poor dad'
The idea behind Kiyosaki's title is that his real father was upper middle class. He graduated from Stanford, Chicago, and Northwestern Universities, all on full scholarship, ultimately earning a Ph.D. He pursued a career in education and became the head of the education department of the State of Hawaii. He owned the home in which the Kiyosaki family lived. Kiyosaki calls him his "poor dad."

'Rich dad'
One day, he asked his father how to make money. His father said he had not made much money and did not know how to make it. He suggested that Robert ask the father of his next-door playmate, Mike. That boy's father was a successful local businessman. He was also an eighth-grade dropout and ultimately a multimillionaire with a bunch of small businesses like construction, restaurants, and convenience stores. Kiyosaki developed a father-son relationship with the neighbor. That is who he is referring to when he uses the phrase "rich dad."

One visitor to this site asked me if I was sure "Rich Dad" really exists. No, I'm not. In fact, I now lean to believing that there never was a "Rich Dad," that Kiyosaki made the whole thing up. If I had written such a book, I would have named him in the book, if only out of gratitude. It is noteworthy that Kiyosaki refuses to identify "Rich Dad" and the Honolulu Star-Bulletin was unable to figure out who it was, in spite of the rather obvious "next-door neighbor Mike whose father owns convenience stores, restaurants, and a construction company" clues. The man was purportedly around 30 to 45 years old in 1955. So he would be 83 to 98 now. How many people on that one street in Honolulu could possibly fit that description?"
...
n 1992, Kiyosaki wrote a book called If You Want to Be Rich and Happy, Don't Go To School? It is "dedicated to Ralph H. Kiyosaki, former Superintendent of Education, State of Hawaii, the best teacher I ever had." This would be "Poor Dad." But Rich Dad Poor Dad, which came out in 1997, says quite emphatically that Rich Dad was the best teacher he ever had.

So maybe "Rich Dad" was the second best teacher he ever had. No. Actually, the 1992 book also identifies the second best teacher Kiyosaki ever had: F. Marshall Thurber.

OK. So maybe "Rich Dad" was third. No. Kiyosaki's 1992 book has an unusually long acknowledgment section. It lists 111 people, none of whom appears to be "Rich Dad." That is, none are singled out except for his "Poor Dad" parents, in-laws, business partner, and editors.

http://www.johntreed.com/Kiyosaki.html


The key Occams razor I always apply is if you have a foolproof way to get and stay rich, why do you host seminars?
 
2012-10-10 11:37:55 PM

MistaWaRe: big sugi: Anybody who thinks that an LLC is going to protect them from personal liability for crashing a car they're driving, or a plane they're piloting, is going to be in for a very rude awakening. You're still responsible for your actions. If you crash a rental car and kill someone, the lawsuit's not going to be limited to Enterprise. Even as asset protection, it won't be that helpful.

Now, putting houses and other profit-generating assets into an LLC is a very different scenario. That generally will limit the available recovery for premises liability and most types of negligence, which is the major concern of a property owner, and it's effective against some forms of contractual liability.  Even there, though, any intentional torts are going to hit you directly. For example, if you rig up spy cameras in the bathrooms, the fact that you rented out the house through a shell corporation isn't going to protect you personally from an invasion-of-privacy claim.


The legal principle they'd use to get the court to disregard the LLC is called "Piercing the corporate veil." No jury on earth is going to believe that your LLC, of which you own 100% and which conducts no business but contains all of your valuable assets, is really a seperate legal entity.

Besides, if all of your plane, car, boat, etc are in an LLC, and someone is injured in an accident with one of those, I would think the theory of liability would be be stronger against the LLC, which owned the sports car that crashed into them, or whatever, and which authorized some yahoo (you) to operate it. I'm also guessing that the LLC has the insurance on these items, which is where the real money is.


Isn't your ownership interest in an LLC considered an asset? When you have a judgment against you personally, can't they take your LLC as one of your personally owned assets?

The reason a business shields assets is to protect the business owner if the business gets sued. It doesn't protect anything if the business owner gets sued.
 
2012-10-10 11:49:07 PM
I just want to say that this has been a thoroughly engaging thread.
 
2012-10-11 12:07:50 AM
I would also highly recommend that you get a general contractors license for your state.  

That is not possible in the state of florida, as it requires one to have atleast one year work experience as a foreman...
 
2012-10-11 12:28:22 AM
www.angelfire.lycos.com
 
2012-10-11 12:58:36 AM
Stupidly rich buddy does this with his party bus. He lives in FL and takes it to various college football games on booze-cruises which his friends, only he set it up as an LLC, hires a driver, got $1m in insurance from KOA and issues receipts for gas money that his friends give him as revenue against operations.

Heaven forbid a can of busch light strikes the driver in the head who careens into a pre-school, his personal assets are protected.

Welcome to how rich people do things.
 
2012-10-11 04:47:42 AM

AverageAmericanGuy: I just want to say that this has been a thoroughly engaging thread.


This.

I'm bookmarking this thread in case I ever have any assets that need protecting.

/Will probably never need to read it again
//Poor
 
2012-10-11 05:22:21 AM

ThatGuyGreg: Not that interesting if you've studied contract law at all.

/IANAL


I liked the surprise ending, "The dealings we had with Learning Annex were with a company that hasn't been in business for a number of years . . ." combined with the letter of intent, and not contract.

Sounds like Learning Annex helped the guy a few times when he got started, and now, 10 books and multiple owned companies later, they want a cut of everything the guy's ever done and every profit he's ever made.

Which seems somewhat interesting.
 
2012-10-11 06:05:28 AM

xynix: This is why I formed an LLC and put my boat and plane into it as well as my fun car. IF I ever have any accidents in those vehicles they can sue "me LLC" (it's actually named after my dog) but I'm protected. They can't sue me or touch my personal assets. My rental home company (for 4 houses) is in a completely different LLC so if anything happens on those properties they can't sue me personally or touch my other assets formed under the previous LLC. My investments not including retirement is in another LLC. These three are managed under an asset protection trust.. My own personal assets are practically nothing so to sue me personally would get someone practically nothing as it should be.

I highly recommend putting together an asset protection trust when you get to the point that you have assets.. including stocks and whatnot. You can easily transfer stocks to an LLC. There are also huge tax benefits for doing this.



I'm going to filter through the typical bullshiat people on the internet say and get to the truth:

your dad is/was a pilot for Delta (you live in Atlanta, duh) and owns a plane with a few other pilots
So you get your picture taken with it and suddenly this is yours
Now after you are born on 3rd base and he pays for your entire upbringing (pilots used to make 250k+ a year) you do some half assed used car salesmen in 3rd world nations selling bunk software

Here's a tip bro, don't ever give business advice because you're horrible at it.
 
2012-10-11 06:28:01 AM

Magorn: xynix: This is why I formed an LLC and put my boat and plane into it as well as my fun car. IF I ever have any accidents in those vehicles they can sue "me LLC" (it's actually named after my dog) but I'm protected. They can't sue me or touch my personal assets. My rental home company (for 4 houses) is in a completely different LLC so if anything happens on those properties they can't sue me personally or touch my other assets formed under the previous LLC. My investments not including retirement is in another LLC. These three are managed under an asset protection trust.. My own personal assets are practically nothing so to sue me personally would get someone practically nothing as it should be.

I highly recommend putting together an asset protection trust when you get to the point that you have assets.. including stocks and whatnot. You can easily transfer stocks to an LLC. There are also huge tax benefits for doing this.

got bad news for you. I'm pretty sure I could "pierce your corporate veil" faster than a drunk tourist at a bellydance show. Courts have little to no patience for corporations that exiat solely to let people weasel out of their responsibilites and serve no business purpose


This. Just because the "lawyer I've known for years" convinced you to pay him a shiatload to set up a spiderweb of LLCs, that doesn't mean his advice actually works. If you are negligent when flying a plane, it's you, not the LLC, that someone would sue. And then you would have to prove that the LLC is actually the proper defendant. Which you might be able to do if it is actually a business, but if it just holds your assets it isn't going to shield your liability. Property is different because premises liability (i.e., someone slips and falls in a rental house) is based on ownership of the property, so in that case the LLC will help you. Even with an APT, creditors can go after whatever interest you have as a beneficiary, and in many cases, particularly where the beneficiary is the person who contributed the assets to the trust, creditors can get to the assets.
 
2012-10-11 07:38:48 AM
This guy is such a prick.

I think his blatant support of all the "MLM" schemes piss me off more though. What does it take to support an "industry" that is based on fleecing the desperate.
 
2012-10-11 08:38:22 AM

netringer: The key Occams razor I always apply is if you have a foolproof way to get and stay rich, why do you host seminars?


Because his foolproof method to get and stay rich is hosting seminars for the gullible. Duh.
 
2012-10-11 09:55:30 AM

sotua: netringer: The key Occams razor I always apply is if you have a foolproof way to get and stay rich, why do you host seminars?

Because his foolproof method to get and stay rich is hosting seminars for the gullible. Duh.


This is my problem with him and anyone else of the same ilk.

His involvement with many of the pyramid scheme (oops, I mean Multi-level marke-- oops I mean network market--- oops social marketing) scams is also a telling sign that the man is completely and utterly full of shiat.

Watched too many friends (not the brightest, but more desperate than anything) fall for that shiat and become a cult zombie to the shiat, or pour far more money and time in to them than they would an actual, proper business venture only to enrich the slugs at the top. I can't WAIT for the legislative onslaught that is mounting pretty quick. It is going to out many of these people like Kiyosaki as total hucksters and frauds.
 
2012-10-11 10:03:49 AM
...Homeless Dad.

//He just wants his kids back.
 
2012-10-11 10:08:04 AM

Robyr: sotua: netringer: The key Occams razor I always apply is if you have a foolproof way to get and stay rich, why do you host seminars?

Because his foolproof method to get and stay rich is hosting seminars for the gullible. Duh.

This is my problem with him and anyone else of the same ilk.

His involvement with many of the pyramid scheme (oops, I mean Multi-level marke-- oops I mean network market--- oops social marketing) scams is also a telling sign that the man is completely and utterly full of shiat.

Watched too many friends (not the brightest, but more desperate than anything) fall for that shiat and become a cult zombie to the shiat, or pour far more money and time in to them than they would an actual, proper business venture only to enrich the slugs at the top. I can't WAIT for the legislative onslaught that is mounting pretty quick. It is going to out many of these people like Kiyosaki as total hucksters and frauds.


This! I have a friend who is pushing that Ambit Energy scheme. "Look I have a conference call with a guy who makes $500k/month."
 
2012-10-11 10:33:55 AM
all of the xynix talk aside and back to the rich dad bankrupt dad guy, here's his next problem:

the lawsuit was for not paying a percentage of his profits back to the publisher. ok. he lost that (will probably appeal, maybe the amount gets dropped a little -- doubtful to get overturned, because the facts appear pretty simple: he breached his contract).

Now, the LLC, at the time of the judgment had only a few million, not enough to cover the 20 million judgment. sucks for the judgment creditor. perhaps.

keep in mind the nature of the breach: it was for a percentage of profits that the LLC made. that LLC must have made more than the judgment against it, since the judgment was only for a percentage of those profits. since the LLC doesn't have the money to pay, that means it was distributed. it may be an unlawful distribution, because it left the LLC incapable of paying its debts. that means, rich dad is personally liable for the unlawful distribution. then, that money goes back to the LLC, and then immediately to the judgment creditor.

/ the moment that LLC goes into bankruptcy, someone is going to demand for that distribution back. the remaining issue will be the timing of the distribution. bankruptcy has a lot of remedies for debtors who coincidentally give away all their money before entering bankruptcy.
 
2012-10-11 11:02:28 AM

Rent Party: Hebalo: Rent Party: Every incorporation document has a "why this business exists" line in it. "To provide transportation services" is all that is really required. There will also be a line in there that says something like "For all lawful purposes."

And it doesn't have to happen at all. "My LLC generated no income, and had the following expenses" is perfectly legitimate. Just because your business lost money doesn't mean it's not a business.



My point being when the lawyers come sniffing around, this still looks pretty damn thin.

It's within the confines of the law, though. That argument is also easy.

"I have a legal business structure registered with the state, a business license with the state in order to conduct operations, and that business files taxes every year. That business holds assets that are depreciated according to state mandated schedules and that are offered for lease according to my businesses business plan. That business has the following list of expenses. My net income (loss) was ($brazillion) Mr. Lawyer-sniffing-around, please explain to Mr. Judge how is that *not* a business, so I can be on my way."

This kind of stuff is set up by people of means for their own benefit. They control the system and have skewed it to their advantage. The reason it seems shady is because most people don't have enough assets to take advantage of it, but that doesn't mean you can't, once you have assets. Fortunately the same laws that allow Mitt Romney to deduct a $70K horse was because he called it a business are the same laws that allow you to call your car or boat a business.

/ Equal protection works both ways.


"Your honor, this LLC has engaged in no commerce, employs no people, and conducts no recognizible business. The LLC's sole partner enjoys personal use of all the assets listed and does not pay rent to the LLC for his occupancy of the real estate. In sum, this is nothing more than an attempt to sheild his assets from legal and tax laibility and therefore the "piercing of the corporate veil" is full justified in thiis case as he has failed to demonstrate a sufficient degree of separation and autonomy between his business and personal assets"
 
2012-10-11 11:08:31 AM

xynix: If I get into an accident on my boat and someone dies they can't touch my property company.


Sure they can. They can go after your stake in the trust which holds a (well, "the", since there's only one) stake in the other LLCs. It just changes the target, it doesn't actually make it that much more difficult to go after.
 
2012-10-11 11:32:56 AM

Magorn: "Your honor, this LLC has engaged in no commerce, employs no people, and conducts no recognizible business. The LLC's sole partner enjoys personal use of all the assets listed and does not pay rent to the LLC for his occupancy of the real estate. In sum, this is nothing more than an attempt to sheild his assets from legal and tax laibility and therefore the "piercing of the corporate veil" is full justified in thiis case as he has failed to demonstrate a sufficient degree of separation and autonomy between his business and personal assets"



Just as a side note, the guy you're arguing with once brought out:

"Do you know how much those jeans I'm wearing in that picture cost? That's a $700 pair of shoes, too!"

as a counterpoint to one of my arguments.
 
2012-10-11 11:40:42 AM
These financial books amount to little more than self help/motivational tripe.

As someone upthread stated: its all generalizations and buzzwords and "You can be rich one day too!"
 
2012-10-11 12:14:30 PM

DoBeDoBeDo: Robyr: sotua: netringer: The key Occams razor I always apply is if you have a foolproof way to get and stay rich, why do you host seminars?

Because his foolproof method to get and stay rich is hosting seminars for the gullible. Duh.

This is my problem with him and anyone else of the same ilk.

His involvement with many of the pyramid scheme (oops, I mean Multi-level marke-- oops I mean network market--- oops social marketing) scams is also a telling sign that the man is completely and utterly full of shiat.

Watched too many friends (not the brightest, but more desperate than anything) fall for that shiat and become a cult zombie to the shiat, or pour far more money and time in to them than they would an actual, proper business venture only to enrich the slugs at the top. I can't WAIT for the legislative onslaught that is mounting pretty quick. It is going to out many of these people like Kiyosaki as total hucksters and frauds.

This! I have a friend who is pushing that Ambit Energy scheme. "Look I have a conference call with a guy who makes $500k/month."


A guy I knew in high school caught up with me on FB and convinced me to attend a meeting with him about a vague "business opportunity". I knew what was up but I'd never been to one of these meetings so I figured I'd go and see what these people actually talk about. There was definitely a lot of "I know a guy who makes x dollars per month with this proven system" BS thrown around there, but for some reason, that person was nowhere to be found. It was quite amusing to hear the presenter go to great lengths to assure us attendees that this opportunity (which turned out to be an IBO sponsored by an IBO sponsored by an IBO sponsored by Amway) was definitely NOT a pyramid scheme. No, it was "more of a tree-type of system", he explained! I honestly had to laugh at that.

I politely listened to the remainder of the presentation, and at the end my old high-school acquaintance suggested that I get my parents involved and that perhaps it could be arranged for the bullshiatter-extraordinaire presenter to meet with them! I let him know that I was pretty sure that wouldn't work and he gave me some promotional CDs to listen to "in my car, or at home, or wherever." Just kind of held onto them for a week until he came by to pick them up.

Overall it was a very strange experience, but the reason these meetings are held is because they do indeed work. As the presentation went on, I noticed that for every expression of incredulous disbelief I saw among us attendees, there was a True Believer seated next to them, enthralled by the endless possibilities of Independent Business Ownership™, and unable to understand the utter impossibility of the fuzzy math being used to draw them in. I haven't heard from my FB buddy who "sponsored" me at the meeting since I gave him back the tapes.
 
2012-10-11 12:19:31 PM

robhidalgo: DoBeDoBeDo: Robyr: sotua: netringer: The key Occams razor I always apply is if you have a foolproof way to get and stay rich, why do you host seminars?

Because his foolproof method to get and stay rich is hosting seminars for the gullible. Duh.

This is my problem with him and anyone else of the same ilk.

His involvement with many of the pyramid scheme (oops, I mean Multi-level marke-- oops I mean network market--- oops social marketing) scams is also a telling sign that the man is completely and utterly full of shiat.

Watched too many friends (not the brightest, but more desperate than anything) fall for that shiat and become a cult zombie to the shiat, or pour far more money and time in to them than they would an actual, proper business venture only to enrich the slugs at the top. I can't WAIT for the legislative onslaught that is mounting pretty quick. It is going to out many of these people like Kiyosaki as total hucksters and frauds.

This! I have a friend who is pushing that Ambit Energy scheme. "Look I have a conference call with a guy who makes $500k/month."

A guy I knew in high school caught up with me on FB and convinced me to attend a meeting with him about a vague "business opportunity". I knew what was up but I'd never been to one of these meetings so I figured I'd go and see what these people actually talk about. There was definitely a lot of "I know a guy who makes x dollars per month with this proven system" BS thrown around there, but for some reason, that person was nowhere to be found. It was quite amusing to hear the presenter go to great lengths to assure us attendees that this opportunity (which turned out to be an IBO sponsored by an IBO sponsored by an IBO sponsored by Amway) was definitely NOT a pyramid scheme. No, it was "more of a tree-type of system", he explained! I honestly had to laugh at that.

I politely listened to the remainder of the presentation, and at the end my old high-school acquaintance suggested that I get my parent ...


The "True Believers" are often plants. Truth is, anyone making real money in this type of thing are either sad, lonely people now that they've shown they will abuse friends and family to make $0.33 off a "sale" to them, or they are sociopaths. Granted, they can be both.

It just saddens me to have watched a brilliantly talented graphic artist fall in to this trap, and basically sink 80 hours a week in to a fleeting dream because some dickhead showed off a leased BMW (that he has to maintain $4500/week in sales to keep since it isn't even his for christs sake) and sold her on an impossible dream.

If she had put the same energy and resources in to starting her own firm, she would be quite successful without becoming a shill and a huckster.
 
2012-10-11 12:36:02 PM

ohknaks: Rent Party: I don't have to manufacture anything. That is the business. The business generated no revenue and operated at a loss. Operating a business badly isn't fraud.

Unless that business operates for more than 3 years with a loss. The IRS then considers that business to be a hobby by default. Good luck convincing a judge that it's a real business.


So, American Airlines is a hobby?

That three year loss rule generally applies to farms, so the IRS can weed out the "gentlemen farmer." My dad played that game with them for decades. It's amazing how you can create a loss or a profit simply by buying feed and grain in December, rather than January.

See how easy that is?
 
2012-10-11 12:37:20 PM

Lusiphur: Magorn: "Your honor, this LLC has engaged in no commerce, employs no people, and conducts no recognizible business. The LLC's sole partner enjoys personal use of all the assets listed and does not pay rent to the LLC for his occupancy of the real estate. In sum, this is nothing more than an attempt to sheild his assets from legal and tax laibility and therefore the "piercing of the corporate veil" is full justified in thiis case as he has failed to demonstrate a sufficient degree of separation and autonomy between his business and personal assets"


Just as a side note, the guy you're arguing with once brought out:

"Do you know how much those jeans I'm wearing in that picture cost? That's a $700 pair of shoes, too!"

as a counterpoint to one of my arguments.


That warn't me. All the shoes I've ever owned in my entire life don't amount to $700.

You must be thinking of someone else.
 
2012-10-11 01:14:05 PM

Robyr: This guy is such a prick.

I think his blatant support of all the "MLM" schemes piss me off more though. What does it take to support an "industry" that is based on fleecing the desperate.


CSB time: last week I connected through Charlotte to get to Salt Lake City. Turns out there was a MLM convention in Charlotte, and I got a bunch of Mormon MLM folks on the plane. Single most annoying flight ever. I fly with a hoodie, and always get a window seat so I can just cut off annoying people. But the row in front and behind me were all achatter for the whole flight with some of the dumbest things I've ever heard in my entire life.
 
2012-10-11 03:14:33 PM
That's Chaz Bono!
www.nypost.com
 
2012-10-11 04:12:28 PM

Rent Party: ohknaks: Rent Party: I don't have to manufacture anything. That is the business. The business generated no revenue and operated at a loss. Operating a business badly isn't fraud.

Unless that business operates for more than 3 years with a loss. The IRS then considers that business to be a hobby by default. Good luck convincing a judge that it's a real business.

So, American Airlines is a hobby?

That three year loss rule generally applies to farms, so the IRS can weed out the "gentlemen farmer." My dad played that game with them for decades. It's amazing how you can create a loss or a profit simply by buying feed and grain in December, rather than January.

See how easy that is?


Actually, it's profit in three out of five years that creates a presumption that the activity is for profit, and that's under IRS rules which, while relevant to this question, aren't dispositive. You have to remember that veil-piercing is a matter of state law because the LLC is a creation of state statute. So while tax returns, etc. are evidence of profit motive, they don't necessarily prove it one way or the other (and American Airlines can easily prove it's a for-profit activity irrespective of whether it's profitable - at most, an unprofitable business can lose its ability to deduct losses).

What's more relevant in your example, where you contribute your boat to an LLC and then try to claim the LLC is a "business" because you occasionally use the boat to entertain clients of other businesses, is the fact that you probably can't prove Boat, LLC is actually attempting to operate as a business at all. Is it registered as a boat livery? Does it advertise the boat for rent? Do you (or your other LLC that is entertaining the client) reimburse the LLC for use of the boat? If not, do you claim that use as income? These are the kind of hurdles that people face when they try to shield assets in this manner. If you do run over someone in your boat and you happen to be entertaining a client at the time, you may well be able to prove that you were acting in the course of business, but you may have the burden to prove that, not the other way around. I'm not saying it can't be done, but an experienced attorney knows it's never "just that simple."
 
2012-10-11 09:24:03 PM
Guys, an LLC is not a horcrux.

Except in that for each additional one you set up for yourself, it costs you another sliver of your soul.
 
2012-10-11 10:33:20 PM

Lusiphur: Magorn: "Your honor, this LLC has engaged in no commerce, employs no people, and conducts no recognizible business. The LLC's sole partner enjoys personal use of all the assets listed and does not pay rent to the LLC for his occupancy of the real estate. In sum, this is nothing more than an attempt to sheild his assets from legal and tax laibility and therefore the "piercing of the corporate veil" is full justified in thiis case as he has failed to demonstrate a sufficient degree of separation and autonomy between his business and personal assets"


Just as a side note, the guy you're arguing with once brought out:

"Do you know how much those jeans I'm wearing in that picture cost? That's a $700 pair of shoes, too!"

as a counterpoint to one of my arguments.



I did some contracting work a few years ago for a clothing company and got thousands in clothes. The expensive jeans just aren't worth it
 
2012-10-12 12:57:32 AM

BHShaman: Ok FARKERS.

I'm claiming IP on this and since it is written here, it might be copyright or previous art, or some *&^)

Why not run your tap water through a mini-turbine to create a trickle power effect every time you run the water. In a household of 4 that might add up with showers, laundry, dishes, etc.

Or maybe I can get rich just talking about how this might make someone else rich.


for years i've wondered why we don't have little generators getting power by running against all four car tires while you go to work and what-not. then the stowed energy may be used in the household.
we could also have little turbines inside rain downspouts giving us free energy. all those spinning drums in washers & dryers across america could have a little generator pressing against them, getting charged up. there is energy all over the place we don't use and i don't know why.
 
2012-10-12 08:20:35 AM

netringer: The key Occams razor I always apply is if you have a foolproof way to get and stay rich, why do you host seminars?


Same theory on a lot of numismatic items. If their value is going to skyrocket, then why are you selling them?
 
2012-10-12 08:54:13 AM
I came across a website where a lawyer proposed the use of an LLC and DBA as a means of anonymizing your personal information so that your home and other real estate cannot be located easily using public records. This is wise if you could piss people off.
 
2012-10-12 01:40:15 PM

Chaos6980: Should be a bit more specific, i'm getting into the rental homes business... and this seems you have a good grasp on the legalities.


I own rental homes and a property management LLC and if you want real advice, what you should do it is talk to an accountant and a lawyer. The basics are that you want to do all business through the LLC. Rent checks are written to X LLC. Pay the bills using checks from X LLC. If you hire handymen, lawncare, snow removal, etc pay using X LLC. If you drop into Home Depot for a do it yourself part for use in a rental home, use the credit card of X LLC. Don't mix up personal and private cash flows ever.

The real thing to focus on is moving money from the LLC to yourself. For example I have a regular job and simply paying myself all the profit would do unpleasant things to my tax bracket when you summed up rental profits + what my regular job pays. So my LLC pays for my cellphone (business expense since I need to respond to tenant maintenance requests). I have a pickup owned by the LLC that my father and I use snow clearance. I then drafted a company policy about employee use of the pickup in that it can checked out to go down to the hardware store on Saturday to buy stuff for a personal project. The LLC offers its employees (myself, my father, and my father in law) insurance that supplements what we already have (as in I have good general medical, but crap dental, so the LLC has crap general medical, but kickass dental).

Basically the lawyer I talked with said "Look the courts aren't going to get overly biatchy about some cellphones, a Silverado, and an odd insurance plan. They will get biatchy if you try to shelter a lot of cash in it or divide up assets in some really odd manner. Or do things like try to pass off a Corvette ZO6 as a company car." With the benefits and the like you can actually make the case that they are done specifically your company seeks to attract part time employees looking for supplemental work, which is a valid business mode. So if this is going to be a second job for you, look at just offering your employees awesome benefits. If this is your primary job, run it like a real company.

/for your own house and the like, put it in trust for the kids to make it fairly untouchable
 
2012-10-12 03:32:41 PM

Rent Party: Moopy Mac: Rent Party: Moopy Mac:
What is a legitimate business function of a LLC that was formed to just owns a couple of cars and a boat? No court in the country is falling for that shiat.

The LLC owns the boat. The boat is available for leasing. Revenues from those operations are returned to the LLC. The LLC expends cash to maintain the boat. Profits, if any, passed through to the LLC members.

There ya go.

So you are now manufacturing receipts and records to provide to a court? Now you've committed fraud (both civil and criminal).

I don't have to manufacture anything. That is the business. The business generated no revenue and operated at a loss. Operating a business badly isn't fraud.

There is no requirement for transactions to take place for me to do any of the above.


A court would look through that facade in a drop of a hat. But you know that, this has just been a mental exercise for us (except for the idiot who thinks his liability can be limited for his personal activities by simply transferring assets to a LLC).
 
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