Discussion:Where should the entity be registered?
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Discussion Forum Index --> Basic Tax Questions --> Where should the entity be registered?
Discussion Forum Index --> Tax Questions --> Where should the entity be registered?
| 4 June 2008 | |
| My client owns a rental property in South Carolina but is resident of New Jersey. Should she make South Carolina LLC or could she use a New Jersey LLC? Please advise. | |
| June 4, 2008 | |
| The attorney that I work with will generally set it up where the property is located. There's no need to register it in NJ since you're not doing business in NJ. If, on the other hand, you registered it in NJ, you'd also have to register in SC where you are doing biz. | |
| June 4, 2008 | |
| South Carolina. As JR mentioned, it's best to do it in the state where the property is located just to simplify the whole process. Why register in NJ, get recognition from SC as a foreign LLC, and have to potentially pay taxes in both jurisdictions (if they are assessed on LLC's). On top of it, it's double the registration fees. Not worth the hassle! | |
TheTinCook (talk|edits) said: | 4 June 2008 |
| It's debatable whether or not the LLC is not doing business in NJ. | |
| 5 June 2008 | |
| I've had problems when the client owns an out of state rental property and experiences losses for a number of years. My specific problem is that the property was located in Wisconsin which has a relatively high tax rate in comparison with Illinois (3%). Illinois has a clean tax structure, basically, what's your AGI-send us 3% of it (after adjustments) - no itemized deductions, not capital gains rate, etc. Since the WI losses gave the client no benefit in WI, they were taken on the Illinois return for several years. I did have him report the losses on WI returns for all those years.
So what happened when he sold the property and I tried to take the carryover losses on Wisconsin? WI alt min tax caught him. My wonderful (or so I fancied) planning over the years failed. If he had sold it three years earlier he would have saved the Wisconsin tax at a high rate & repaid Illinois at a low rate. Moral? You just can't outguess the states. | |
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