Wisdom of creating and holding a sport yacht in an LLC.

I am in both camps: Present boat is owned by an LLC, previous boat owned by an LLC.
Advantage for the buyer as there is no sales tax but some buyers are ignorant or they don’t care: Sold previous boat instead of the LLC, buyer would rather pay the 6% Florida sales tax than deal with the LLC thingy.
(He fell in love with the boat, money or sales tax was not an issue, full asking price paid, unreal.)

LLC does not save you sales/or use tax, that I know of, unless it is a bona fide business? Holding companys for the benefit of an individual are usually tax pass throughs. Teach me. I have mine in an LLC for liability reasons - as minimal as that is if I am the one piloting the vessel.

Why would someone buy a NYS LLC to do business in Fla. - 2 tax returns? Asset sales rather than a sale of the corporate book also breaks the chain of liability. Almost nobody does a stock/membership purchase on a closely held business (non-public) for that reason. Why be liable for someone else's negligence that you have no way of discovering before you purchase? That indemnity agreement without a clean letter of credit to back it is worthless.

No legal advice provided here, only personal thoughts

Most sale tax laws have a parallel "use tax" provision which equals the sales tax, if you keep the vessel in the state beyond a proscribed time. Do a quick google for your state. But I am always open to learning something....

By the way when you register the boat locally, which you are required to do even if documented, you will be asked for a affidavit of purchase price (usually signed under the penalty of perjury) - the state doesn't care if its titled in the same name, it want's to know what funds were exchanged so they get their piece of the action.

Again no legal advice, just thoughts.

[QUOTE

Indeed when selling you can sell the LLC to avoid paying sales tax but it some buyers feel adds a layer of risk to the deal[/QUOTE]


Indeed, teach me on that one. Unless the state doesn't have a parallel use tax and its used for pleasure, how do you avoid that tax legally?

Indeed, teach me on that one. Unless the state doesn't have a parallel use tax and its used for pleasure, how do you avoid that tax legally?[/QUOTE]


They will absolutely ding you when you go in to register the vessel for its use in that state. They will require proof of tax being paid on the transaction. Florida caps it at $18k, but a buyer of a previous boat I owned is wrestling with this right now. He received a letter from the state demanding the payment or proof that the vessel has not been in state waters for 90 days.

https://www.thelog.com/ask-the-attorney/will-purchasing-an-llc-avoid-sales-tax-on-a-yacht/


Here is a helpful article re LLC transfer in California. Apparently California doesn't have a use tax provision for an LLC, but beware the pitfalls. I can't belief CA would leave this money on the table, but.....

The initial transfer into an LLC will certainly require a use/sale tax payment.

Only personal opinion here

To answer this credibly, one would have to be an attorney familiar with the tax laws of the state involved. On top of that they would need to know about you, your state of residency, your other assets, your income, your planned boating and your risk tolerance. Then they could advise you appropriately. Every state has different rules and laws and those small differences are what get people in trouble. There are also even differences on some things for residents and non residents.

We do have our boats in Corporations. However, we will not transfer those corporations to others when selling, no matter the benefits, for personal reasons.

If you do have an LLC or Corporation you transfer, make sure you get all records on everything changed immediately. We've talked here about having liability when you take over an LLC with unknown liability. Well, you can also find yourself being held accountable for activities of an LLC you no longer own. New owner fails to file with the state, your name still there. New owner does business with a vendor you used but had at one time given a personal guarantee. Registration or documentation not changed promptly so it's like a new car owner riding around with plates still in your name. This problem is rare but it's major when it happens.

I don't know the sales tax end of it. But I had owners from Michigan buy a yacht in Florida, put it in an LLC, and pay the $18k sales tax. Their residence is MI, but the boat always stayed in Florida, aside from a week or two trip to the Bahamas once or twice a year. They didn't have a residence in FL, so perhaps that's why they set up a Florida LLC?

This ^^^^^^. Personally I prefer the path of the least resistance and pay. Everyone pays somehow somewhere sooner or later.