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William Bronchick

William Bronchick’s Answers

49 total


  • At home eBay business in NYC-- LLC or S-Corp??

    I would like to sell items online on eBay and Amazon and eventually my own website. I am a one person at home business and would like to know which is better for me, a LLC or an S-Corp. I will go see a lawyer and a CPA (both of which I have not fo...

    William’s Answer

    An LLC can be setup to be taxed as an S corp, which essentially is the same thing as an S corp for tax purposes. However, LLCs are easier to run, less formalities required than a standard S corporation. In NY, however, most people go with S corp vs. LLC (assuming the LLC will be taxed as S corp) because it is MUCH cheaper in NY. NY law requires that you publish a copy of the articles of organization in the newspaper, which in NYC is OUTRAGEOUSLY expensive.

    Bottom line, this is more of a CPA question than a lawyer question - seek tax advice before proceeding.

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  • Is this a legit contract for deed since nothing is filed at the court house?

    I have bought a house contract for deed. The lady I am buying it from just typed up a contract and then we both had it notarized. She has in there if I am to move she can take me to court and finish paying what I owe. I was considering moving to a...

    William’s Answer

    A agree this should be reviewed by an attorney, but here's some general ideas to consider that should not be construed as specific legal advice, but general principles of contracts for deed...

    A contract for deed (aka "installment land contract") is a seller carry transaction and is considered a "sale" for all intents and purposes (including for federal income taxes). It does not have to be recorded, BUT, to protect yourself as buyer, recording is generally recommended, with a couple of qualifications:

    1. If buyer records it and there's an underlying loan on the property, the lender may catch it and call the underlying loan due, which would put the buyer in jeopardy. If you don't record it, then the seller's liabilities may end up attaching to the property and recorded (example - IRS lien or judgment). My personal experience with a lot of CFD's is that the latter is a more likely risk than the former.

    2. If the contract contains a clause prohibiting recording, then recording it may be a default of the contract itself.

    3. Another option in lieu of recording the contract is to record what's known as a "memorandum" (summary) of contract, which (in most states) can be done with only the buyer's signature. Of course, this memorandum may result in problems described above in #1 and 2 above.

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  • Can a single member LLC Never elect to file 2553 because of the default of sole proprietorship? If so, what else can be done?

    New LLc

    William’s Answer

    An LLC single member (or any number of members) CAN elect to be treated as an S corp under federal tax law by filing IRS form 2553. Or, you can file form 8832 and be a "C" corp. Make sure you have an appropriate operating agreement for either option.

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  • I'm purchasing a home. I don't want my name on the assessor's website. How can buy a home without having my name show up online?

    From my understanding, how I take title is how my name will show up on the county assessor's web site. Is there any way I can take title (I do not have a trust set up nor the capital to do so) without my name being out in searchable property reports?

    William’s Answer

    • Selected as best answer

    A trust (revocable land trust) is the best way to do it, because trust agreements are typically not recorded anywhere public in Colorado. An LLC is another option, but two issues - one, you need to get someone else to file it for you and be registered agent, so as to keep your name off the secretary of state records. And two, your lender will probably not let you take title in an LLC if you are getting a loan. Some lenders will allow a trust. If not, you can quitclaim the property after closing to either an LLC or trust, but there will be a paper trail to follow behind you.

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  • I have separated from my partner and now live in CO. We co-owned a home in Houston. Do I need to place a lien against the home

    in case he tries to sell without my knowledge.

    William’s Answer

    If you are on title, your partner cannot sell the home without you, it requires both signatures.

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  • What consequences may there be if I let my ex buy me out of our house by getting a loan from his mother?

    My ex does not want to refinance, and I am willing to let him buy me out by getting a loan from his mother. My concern is what will that do for my credit if I want to buy a house for myself.

    William’s Answer

    I would try and see if your ex can refi or complete assume your responsibility for the loan with the lender, thus removing you from personal liability.

    Having the loan still in your name will affect your ability to get another loan because the existing loan shows up as a liability on your credit report. However, many lenders may not count this against you if you can show a divorce or settlement agreement by which the ex agrees to be responsible for the payment. I would visit with a mortgage broker and see what the rules are for FNMA/Freddie Mac or FHA loans in this regard before proceeding.

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  • Purchasing a Lodge and Cabin resort. We are putting in LLC. How should we classify entity?

    My husband and I are closing on a property and business with a Lodge and Cabins. We are putting in LLC. How should we classify entity? Partnership, Corporation or entity disregarded as separated from owner?

    William’s Answer

    The general rule is that ORDINARY or EARNED income should be in a corporation, and PASSIVE income should be in a partnership or disregarded format. The issue is whether the income you are earning from the lodge and cabin is ORDINARY or PASSIVE, which you may want to review with your CPA. It's possible you may have both types of income in the same business (i.e., food and services are ordinary and the rentals are passive).

    One thing you may want to consider for both liability limitation and tax benefit is to have an LLC (either as partnership or disregarded) own the property, and lease it to another LLC taxed as Corporation to run the lodge business.

    Finally two other issues you need to tackle:

    1. If you choose corporation election, whether you go "C" or "S" corp. Generally, businesses that are small start S corp and sometimes convert to C in the future when the net income is more substantial.

    2. For passive income activities, you can go either partnership or disregarded. Disregarded is slightly easier because you report the income and expenses on your personal return, as opposed to on a partnership return (form 1065) and receive a form K-1 with the net profit or less. The partnership return will cost you several hundred dollars every year to a CPA. Anecdotally, my colleagues and I have observed that reporting on a partnership return leads to a lower risk of audit than reporting on your personal return.

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  • Spouses each own 50% of s corporation. Upon divorce one spouse gives up her shares. What paperwork for taxes needs to be done

    What legal paperwork needs to be done or is only the final divorce decree needed? Does a k-1 reflect ownership prorated to date of divorce?

    William’s Answer

    Without getting into the tax or divorce issues, the paperwork is simple. You should have stock certificates from when you formed the corporation in a corporate record book somewhere. Simply turn the certificate over and there should be assignment language on the back of the certificate. Just fill that out and assign the stock. If you only formed the corp online and never did by laws, minutes, stock certificates, etc, then you're going to have to get a lawyer to re-construct all of the paperwork that should have been done in the beginning.

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  • Do i need an Real estate attorney?

    Im carrying the note on a home in colorado....the buying party has defaulted on several areas of our contract including acquiring said financing within a specified time. they continue to ignore my request...i would prefer to either reposses or re...

    William’s Answer

    You will need to hire an attorney to foreclose the property. You cannot get the property "repossessed" with going through the foreclosure process, assuming you gave title to the buyer and took back a note and deed of trust as collateral. Try offering the buyer "cash for keys", which means doing a deed in LIEU of foreclosure. Sometimes cheaper and easier. You'll likely need an attorney to draw that up as well.

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  • How can I assume our mortgage when my husband won't agree to it?

    My divorce was final 10/14. I am keeping the house in our divorce. I am on the title, but not on the loan. The mortgage company says I can assume the loan, but he has to sign documents. He is refusing. Am I able to do this with his signature, if ...

    William’s Answer

    I am not sure why you would WANT to assume the loan, be personally liable for it, and have it report on your credit? Leave it in his name, and make it his primary responsibility. You can still deduct the mortgage interest if you own the house and make the payments, even though your name is not on the mortgage loan.

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