Titling in another state to avoid sales tax

finding ways to reduce taxes is legal, avoiding is not. And here is where the tax collector usually wins in the U.S.: it is the intent of the law, not the letter of the law that is persuasive in tax court.

As a CA resident, born and raised, I felt a duty (call me a sucker) to pay my taxes, reg fees, and get the proper smog certs the state requires to have a CA plate. At this point many years later, the state smog requirements are the aggravating issue. Historic plates can avert that, but have their own restrictions which I don't care to worry about at this point.

Other posters have said it, but I drive with impunity and with my head peacefully on my pillow at night, ymmv because we aren't all built the same.

With all that said, there is an interesting approach that I am looking into, use of an LLC to own vintage/collector cars). The thought is that the entity owns a car and pays for the associated costs in addition to acquisition. At time of sale, buyer purchases the LLC, which contains the underlying assets. There is no sales tax on purchase of an LLC, the title of the car remains with the LLC and continues to be registered in whatever state of its use, CA in my case even though the LLC is likely domiciled outside of CA.

I am considering this as part of an estate plan, a future buyer of the LLC would not be subject to sales tax and if the member interests are owned by the decedent, the estate beneficiary(s) would enjoy a step up in basis.

opinions/comments welcome.

 

^^^^ what is to look into ?

completely legit but many potential pitfalls for the buyer

 

exactly the kind of comment I was seeking, what are the buyer pitfalls?

 

well.. in addition to buying the assets you are also buying the liabilities of the LLC, known and unknown.

i'd have no problem setting one up to hold cars myself and selling the LLC to another...

i'd have to think about buying one from someone else.

 

I believe some people buy / own yachts this way.

 

Interesting. I am not arguing, but my response is that it doesn't matter what the LLC owns, a company, real estate, or a car(s), yet these entities change hands through sale all the time. Would there be a difference when it owns cars?

buyer beware as in all transactions, I guess.

 

Cant you put into the contract something like "All liabilities against Corp X, known or unknown, prior to the time of the signing of the contract are the responsibility of xxxxx"
xxxx being the CEO or Pres of the LLC (or normal corp) ?

 

it can own cars, it could own anything - i am not arguing what the LLC or the entity consists of. the concept of using the LLC to own an asset is valid.

that the ownership of the LLC can be transferred and hence assets "sales tax free" also is valid.

 

you could - would you sign that ? i employ LLCs to limit my liability...

why would i voluntarily pierce that corporate shield and open myself up to UNLIMITED liability ?

just something to consider, thats all.

 

Absolutely.

I just bought a corp and that clause was a requirement. Without it.. see ya.

If I were a shyster selling a flakey corp... probably not.

 

have u ever been audited? not fun
btw didn't al capone go to jail ultimately for tax evasion
I wldnt be posting about it on the internet but that's just me

 

u lost me.....

so you would sign ""All liabilities against Corp X, known or unknown, prior to the time of the signing of the contract are the responsibility of xxxxx" ?

i wouldn't...... i'd find another dimwit buyer.

 

thats a good point.....

what if the seller of the CAR LLC was playing tax games ? showing a loss, etc ?

he sells to you and he withdraws as a member pulling his capital balance down to zero and three years down the road you get audited.....

 

You are rude