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I posted this thread in response to a question which 316 asked me in the GOOD MORNING THREAD about original receipts and how carbon and cash register receipts can fade over time. Since this answer got kind of long, I didn't want to put it in the Good Morning Section and since this may be of some interest to others, I thought maybe it should be in it's own off topic thread.

The question posed by 316 was essentially "What happens if your original receipt or documents fade over time?" as this was part of a discussion about extended warranty companies requiring the original sales receipts, in some cases, in order to process extended warranty claims.

This is also an issue with the IRS and their audits, but they have allowed me to use photocopies of receipts and checks, etc. in the dozen or so audits I have had the opportunity to personally experience with them. This led to me explaining about the process we use to deal with this issue as well as what happened when I needed one of the original documents and was quite surprised to find out that it had vanished at a time when it was REALLY IMPORTANT.

Ok, Here we go.........



Funny you should ask. My wife always takes the receipts and makes a photocopy of them because she keeps everything in 3 ring binders alphabetically and chronologically by month, so she wants them on 8.5 x 11" paper so she can 3 hole punch it to fit in the 3 ring binders anyways and it's faster to copy the receipt than to try to tape it to the page. Then she puts all the original receipts in a clear pouch in the back of the 3 ring binder for that month so she has the original and a copy. We haven't had any of the originals fade to the point of "being invisible" yet but some are certainly on their way.

But I did run into an interesting problem with another important document, which was on a form of copy paper from being a multi copy document run through what looks like a dot matrix type printer. Some of my vehicles are registered and owned by a Montana LLC which is my personal name. So, the registration and title paperwork simply says my name, LLC and then at the Montana Address which is my Montana lawyers office in Missoula, MT.

The reason I have done this is a couple fold. Montana has no state sales tax on vehicle purchases (or any purchases for most things still, last I checked) and they also issue lifetime (permanent) license plates on many different vehicles like trailers and my Harley's, etc. Also, I wanted the extra personal liability shield which the LLC provides because when I started the LLC, I was "Semi Professionally Drag Racing" and there is a element of risk to going 0 to 230 mph in 1,320 feet or 0 to 180 mph in just 660 feet and should there ever be an incident, I wanted the extra holding company "entity veil". So my race cars, semi truck and trailer, motorcycles, track scooters, etc, etc. ended up being owned by the LLC., along with a couple of my personal vehicles like my Mercedes SUV, etc.

Well, I bought a 45' diesel motor coach a few years ago and the sales tax in Michigan would have been $26,000 plus the annual plates are something like $1,800 because it is based on value, etc. In Montana, if you are a resident, the permanent plates for that vehicle were something like $195. The sales tax on the Semi Truck and custom race trailer would have been another $30,000 plus in Michigan and in Montana, it was merely the cost to set up the LLC and the lawyers fees to maintain it, which was less combined than Michigan wanted just for the license plates for the Diesel motor coach annually. So needless to say, over a few years, it saves you a lot of cash.

Well, I was pulled over this spring on my Harley for 97 mph in a 70 mph zone and when I reached into my saddle bags and pulled out my certificate of insurance and registration, I hadn't opened the registration in a couple of years because it isn't renewable since it is a permanent issue. It also is on a 8.5" x 11" sheet of carbon copy paper and when I opened it up and handed to the officer, he looked at me and said "Do you realize that this is a blank sheet of paper?" (other than the Official State of Montana letterhead it is on) Sure enough, all of the printing was GONE since it was the carbon copy. Turns out the moisture from riding in the rain, etc. caused the page to "vanish", even though I had it in a plastic shipping label pouch stuck to the inside of the saddle bag but not sealed shut so I can slide the documents out when I need them.

I was shocked. I think he could tell by my reaction that I was as surprised as he was. I thought for sure I was getting a "free ride downtown". He ran my plates through the lien and background check and it came back clear. But what really seemed to break the ice was the fact that I had already stopped and was waiting for him when he had turned around to "speak with me". I knew he would be really "unhappy" if I made him run me down, which I knew from past personal experience. And I had my I.D. and CPL out when he arrived and immediately declared the firearm I was wearing. He "explained" that I should probably "cool it" and he also said I hadn't had a ticket since 1994. (Important note, I don't often ride or drive like I was in this instance. We had just made some "tuning enhancements" and I was trying them out. Normally, I am quite the responsible guy as evidenced by my 21 year ticket free history).

But he did say to me " I can assure you that if you keep these sorts of stunts up, that will no longer be the case". He was actually really cool about the whole thing and he mentioned that he appreciated I didn't make him "chase me". See, personal experience does pay off........:laugh: It also doesn't hurt that my brother is a Captain in the Sheriff's department so the officer was quite familiar with my last name, which is very unusual.

I have been through 3 State of Michigan tax audits because of my chronic IRS "relationship". While Michigan wasn't happy about me taking advantage of the "loop holes" which exist, there wasn't anything they could do about it. This is one of the reasons why most commercial vehicles you see all have plates from either Utah, Montana, some are from Delaware, Maine, etc, depending upon their state of corporate establishment and the tax regs which permit you to take these advantages if you know the law.

Check out the next UPS or Fed Ex truck you see and chances are the license plates will be from a state other than the one you live in. Also, most of the Luxury Motor coaches have Montana plates for the same reason. I am all for paying my share of taxes but I don't want to be stupid about it. I research the law and use every available legal remedy to keep as much of my own money. Yes, it has brought me into audits, etc., but I always represent myself and I have yet to lose one. :unknown:

One more morsel to think about for those of you who are boat owners. I set up an LLC to own our boat when we purchased it, but it is NOT in my personal name because I want the LLC to be resalable to others. The reason I did this is because that way the boat is owned by and registered to the LLC and when you sell the boat, you actually sell the LLC company which owns the boat and that way the boat isn't subject to either state sales tax nor is it required to be re-registered, all of which are expenses and the larger the boat, the larger the registration and tax fees. It also provides you with the liability shield so you insure the boat through the LLC (same with all vehicles in any LLC). To avoid some goofy name that a new owner may not like, I usually just name the LLC similar to the boat so it makes sense. My boats LLC is a variation of the boats size and builder such as "The 45 Sea Ray Sun Dancer, LLC".

Hope some of you find this information of value to help minimize taxes, fees and liabilities legally......
 

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Check out the next UPS or Fed Ex truck you see and chances are the license plates will be from a state other than the one you live in. Also, most of the Luxury Motor coaches have Montana plates for the same reason.
If you look at tractor-trailer trailers on the road you will see that 90% of the trailers have a Maine plate on them no matter where they are from. I don't know the exact details but it is a huge savings to have their trailers tagged in Maine - it's all done through the mail.
 

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If you look at tractor-trailer trailers on the road you will see that 90% of the trailers have a Maine plate on them no matter where they are from. I don't know the exact details but it is a huge savings to have their trailers tagged in Maine - it's all done through the mail.
Coaltrain, seeing all of those "Maine" semi plated trailers over the years is precisely what caused me to begin the investigation as to why that was occurring, which is what led me to setting up the LLC's, etc. I was very glad I took the time to research the various laws and regulations.

The only possible complicating issue for having the LLC's involved is that it is critical that one never "pierce" the veil provided by the entity liability and asset separation shield. That means that each LLC establish it's own business checking account so that all expenses paid for the vehicles are always done so from LLC based money. In other words, you NEVER want to write a personal check to pay for a repair or fee related to the assets of the LLC because once that separation between personal assets and LLC assets is made, any good lawyer worth their salt will find a way to pierce the protection provided by the LLC and drag personal or other business assets into the issue.

But once you are used to doing things for each business, which I have done since my first company in 1981, it becomes a habit which is easy to follow. Also, the IRS pays close attention to the inter company fund transfers and asset usage so you always have to run it like a business. But for the savings it provides, it is a very small inconvenience to deal with......
 

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The LLC thing is pretty well known in the RV community. People have been doing it for years and in the last 5 or so years, a lot of States have been trying to figure out ways to crack down on it.

As far as receipts go, I know I ran into the problem of disappearing cash register receipts when I had my business. I started scanning them all into my computer as .jpg files and attaching them to the appropriate work orders in my accounting software app. I only got audited once but I was able to print out the receipts I needed and the IRS had no problems accepting those. In fact, the auditor was kinda impressed that I was able to hand him a CD with all the images so that he could file that with my audit paperwork instead of 1000+ pages of print-outs.

The receipts do better if you can keep them from being exposed to sunlight but they all fade pretty fast nowadays. It's a drawback of thermal printing.
 

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More good reasons for everyone to push towards the FairTax.
It does away with all individual taxes and everyone pays the same exact percentage as a usage tax.
Pass the FAIRtax | FAIRtax
How would the FairTax proposals affect anything with this? The FairTax proposal doesn't do anything for State and local level taxes.
 

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How would the FairTax proposals affect anything with this? The FairTax proposal doesn't do anything for State and local level taxes.
Yes, it does.
Just as you and I and everyone else has a monthly budget to live within, it forces govt. from local on up through the feds to live on the budget "We the People" allow them to work with.
 

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The LLC thing is pretty well known in the RV community. People have been doing it for years and in the last 5 or so years, a lot of States have been trying to figure out ways to crack down on it.
I did my first LLC for this type of approach in 1991 and have done numerous since. The states have passed laws which are easy to defeat, such as requiring proof that the vehicle leaves their state for 30 days or more in any calendar year and you must have documentation of such, which again is easy to defeat..........
 

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Yes, it does.
Just as you and I and everyone else has a monthly budget to live within, it forces govt. from local on up through the feds to live on the budget "We the People" allow them to work with.
From the FAQ at your own linked site:

"How are state tax systems affected, and can states adequately collect a federal sales tax?

No state is required to repeal its income tax or piggyback its sales tax on the federal tax. All states have the opportunity to collect the FairTax; states will find it beneficial to conform their sales tax to the federal tax. Most states will probably choose to conform."

So they admit that the proposal creates NO requirement for States to do anything but they presume that States will choose to follow the same method. And they address only Incomes and Sales taxes. They make no mention of eliminating any Personal Property Taxes, Excise Taxes or Property (i.e. Real Estate) taxes.

The Fairtax proposal would mandate a change in FEDERAL tax implementation - not State or Local.
 

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I did my first LLC for this type of approach in 1991 and have done numerous since. The states have passed laws which are easy to defeat, such as requiring proof that the vehicle leaves their state for 30 days or more in any calendar year and you must have documentation of such, which again is easy to defeat..........

Yep. The States are scrambling to find ways to plug the leaks. MA took the opposite approach. Under MA law if it is IN the State for 30 days out of the year you are required to be registered in MA. I gotta move! :laugh:
 

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Yep. The States are scrambling to find ways to plug the leaks. MA took the opposite approach. Under MA law if it is IN the State for 30 days out of the year you are required to be registered in MA. I gotta move! :laugh:

Maybe SulleyBear can explain this, but I think Montana may do something similar. I see a lot of pickup/ work trucks that will have a current tag from somewhere (usually Wyoming or Colorado) along with a current Montana tag. Sulley, any idea what that's about?
 

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Coaltrain, seeing all of those "Maine" semi plated trailers over the years is precisely what caused me to begin the investigation as to why that was occurring, which is what led me to setting up the LLC's, etc. I was very glad I took the time to research the various laws and regulations.

The only possible complicating issue for having the LLC's involved is that it is critical that one never "pierce" the veil provided by the entity liability and asset separation shield. That means that each LLC establish it's own business checking account so that all expenses paid for the vehicles are always done so from LLC based money. In other words, you NEVER want to write a personal check to pay for a repair or fee related to the assets of the LLC because once that separation between personal assets and LLC assets is made, any good lawyer worth their salt will find a way to pierce the protection provided by the LLC and drag personal or other business assets into the issue.

But once you are used to doing things for each business, which I have done since my first company in 1981, it becomes a habit which is easy to follow. Also, the IRS pays close attention to the inter company fund transfers and asset usage so you always have to run it like a business. But for the savings it provides, it is a very small inconvenience to deal with......
How are these LLCs funded? So they can write check? Are they then subject to income taxes?
 

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Maybe SulleyBear can explain this, but I think Montana may do something similar. I see a lot of pickup/ work trucks that will have a current tag from somewhere (usually Wyoming or Colorado) along with a current Montana tag. Sulley, any idea what that's about?
Do I understand that they are running "dual tags"? Boy that is a good one. I don't know but you can bet I will be doing some research.........Maybe I am missing something that is a new opportunity......:laugh:

But seriously, I will look into it as I haven't seen that done before. I know states REALLY frown upon someone have more than one drivers license but as far as vehicle tags, that is a new one, especially on pick up trucks or anything under 1 ton. But you can bet I will be searching tonight........
 

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Do I understand that they are running "dual tags"? Boy that is a good one. I don't know but you can bet I will be doing some research.........Maybe I am missing something that is a new opportunity......:laugh:

But seriously, I will look into it as I haven't seen that done before. I know states REALLY frown upon someone have more than one drivers license but as far as vehicle tags, that is a new one, especially on pick up trucks or anything under 1 ton. But you can bet I will be searching tonight........
That's correct. The trucks are tagged in Montana, along with a different state that I presume is a 'home' state. All I can guess in Montana requires vehicles that are in the state more than X number of days a year to register there? :unknown:
 

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Maybe SulleyBear can explain this, but I think Montana may do something similar. I see a lot of pickup/ work trucks that will have a current tag from somewhere (usually Wyoming or Colorado) along with a current Montana tag. Sulley, any idea what that's about?
I'd have to guess that those commercial apportioned tags. Those are, AFAIK, the only type of registration you can get and have multiple tags on one vehicle.
 

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Actually, maybe this explains it. I've never seen this anywhere else but this is from the MT DOT WWW site:


Registration Purposes Only

RPO stands for Registration Purposes Only and is for an out of state carrier who has been in the state longer than 72 hours on a Montana permit or is gainfully employed. Carriers can obtain the RPO through the county that they are currently working in. County Treasurer Motor Vehicle Offices

Out of state residents who are temporarily working in Montana or are using their vehicle for hire, compensation or profit, must display Montana plates and pay taxes for using Montana public roadways. Because they are not Montana residents, they cannot title their vehicles in Montana. To qualify for a registration purposes only permit, the out of state resident must provide a current out of state registration. A temporary registration is acceptable, as long as it's current.
 

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How are these LLCs funded? So they can write check? Are they then subject to income taxes?
ZebraFive, the funding can be done a couple of different ways. It can be a loan from one entity to another, which must be a real loan between either you and the LLC or a loan between one other entity which you control and the LLC. Another way is simply "capital investments" into the LLC, which means that expands the asset base of the LLC, which could mean that there is more assets should you ever be subject to a lawsuit or some official damages award.

Loans are subject to "arm's length" requirements of the IRS, which is generally the same or similar terms which a commercial lender would loan money with terms and collateral agreements, but it doesn't need to be complicated. Many just do "Capital Investments" into the LLC's to avoid any loans. But it is important that you don't treat it like your personal checkbook. NEVER pay any personal bills out of the LLC as if the IRS or any lawyer can prove you treat the LLC like a personal account, you will potentially lose the protection of the entity veil, which normally limits the liability to the extent of assets in the LLC.

Some even keep their LLC assets leveraged to reduce value, but I would rather just pay a few hundred dollars a year for some comprehensive Umbrella Liability coverage and keep my LLC assets debt free. Many also use the 2nd home mortgage interest deduction on either their motor coach or large enough boat with living quarters, but those deductions are phased down as your income goes up and I would rather just have assets which are debt free and forgo the tax deduction. I hate debt and refuse to allow any banks to get their claws into me. Anyone who has ever been in business long enough and dealt with a bank knows that eventually the bank will put their boot on your throat simply because they can.

The LLC's which own assets that I have set up that do not own any income producing assets (like my motor coach LLC) so while there is a minimal filing requirement to keep the LLC valid at the state of domicile level and basically a simple no income / no assets statement. All LLC's are pass through tax entities which mean any income you would have is taxed at the owners proportionate interests in the entity. In my case, I own 100% of most of the LLC's and Mrs. Bear and I co-own a couple of other LLC's, so on our joint returns, the "real business" LLC's income just passes through and lands on our personal return.

I have a couple of businesses which require extensive state and federal licensing (Series 6, Series 7, Series 63, Series 22 and managing principle License (can't recall the number) and a few other licenses which escape me at the moment, with all of these and more licenses comes mandatory continuing education requirements and other issues which my wife doesn't want to bother with, so I own those companies. We also own a Third Party Administrator which she controls and I am just the capital behind it. These businesses are income producing assets. From time to time, I have leased my motor coach to my "real businesses" and the same with the boat. But when you do this, you really have to document it thoroughly and keep really good records as it is these types of things which have made the IRS my seemingly perennial friend.

My drag racing LLC also was a business which I used to essentially write off the entertainment legally. The IRS doesn't require that a business actually make a profit, but it has to have a "profit objective" or you risk them deeming such activities as a hobby and disallowing the entire thing. As long as it makes a profit in one of every three years or so, they will permit it to be an eligible expense, but trust me, they really watch this stuff like a hawk because it is full of abuses.

We had a period of 9 straight months where we leased our Motor Coach at 100% to ourselves because our home was struck by lightening (actually 4 times) but the last onesrtike was a huge direct hit which blew a hole 5 feet in diameter in the roof. That strike caused a fire which did $400,000 worth of damage to the attic and roof and some water damage. We lived in the coach for those 9 months as we didn't want to move into another home while our home was being rebuilt.

The lightening strike which caused the fire also struck my wife and I as our bed was plugged in with electric blankets and my wife was sleeping on an electric heating pad at the time. I found her 5 feet away from her side of the bed, face down on the floor unconcious. I thought maybe she had gotten out of bed and fallen as our bed is on a raised one step platform, but she had no recollection of the entire event and I had trouble getting her to awaken. At the time we didn't realize it was the lightening but she developed serious health issues immediately severe migraines, it instantly threw her into menopause and she has suffered with serious joint and bone pain which she hadn't been sick a day in her life before the strike, but that seriously changed things permanently.
 

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That's correct. The trucks are tagged in Montana, along with a different state that I presume is a 'home' state. All I can guess in Montana requires vehicles that are in the state more than X number of days a year to register there? :unknown:
I realize that this isn't the same as the license plate issue, but Several times I have been "nabbed" in Colorado and I have been required to purchase state fuel permits, even though the vehicles were such that they didn't require CDL''s and they were specifically exempt from those Federal Regulations.(The one vehicle wasn't even a diesel). But rather than argue with some guy at the Inspection station and end up having him search our vehicles, I just paid their equivalent of a bribe at a few hundred bucks in their "temporary permit fee" and moved along.

Sometimes it not to wise to challenge the "local yocals" at 3am on some desolate highway weigh / inspection station. It can bring more grief thru delays and other hassles than to simply paying the man and be getting on our way........ One time the 48 hour permit I had bought on the way in was about to expire before we could back past the same station on our way out. So I thought I would be a "wise guy" and circumvent the weigh station / inspection station by using back roads. That only further aggravated the guy when he caught up with me and he didn't buy that I was "touring local scenery" in the middle of the night.:unknown:
 
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