T&T: Delaware Corp ownership question

[Mike Maurice]

> Thanks for the feedback.  As I suspected, the corporate thing doesn't 
> help with taxes.  Our main interest in an LLC ownership is for better 
> liability protection.  I am slowly sorting out the rules & regs that 
> will pertain to us living in Texas.  Looks like we will owe a sales/use 
> tax 90 days after bringing the boat to Texas.  The boat can still 
> legally be documented as a Delaware boat with the USCG and will show a 
> Delaware city as it's "home port" but with a TX registration sticker.

www.flagsofconvenience.com/pdf_files/delaware.pdf

1. Limited liability.
2. Use/sales taxes.

I think there is a misconception as the effectiveness with which item #1 
  will be of use. Whereas it may be of some value in non maritime legal 
proceedings, I suspect it will be of almost no use in legal proceedings 
in a maritime accident. It's not that the boat won't be owned by a 
corporation, it's that you will be personally managing it and if that is 
the case whoever is actually in charge of the boat will be accountable.
In other words the corporate veil will be pierced.

I suspect you can find 100 maritime attorneys of whom 50 will argue it 
one way and the other 50 can argue it the other way. But, what I am sure 
of is that most yachtsmen have a very unrealistic faith in how much 
protection will be gotten by documenting as a corporation in ?? (Delaware).

As a practical matter I don't think a Delaware corporation is worth the 
expense, if a boat to be moored in a single state of which you are a 
resident and mostly travel to other states for short visits. Where the 
value would be is if you are cruising out of the country.

There is also the value of the boat. At some variable number in dollars 
it makes little sense to incorporate. I am guessing, but below $250K or 
maybe even higher would be the threshold for incorporating.

As far as Texas is concerned, incorporation in Delaware versus Texas is 
most likely only a matter of where the incorporation can be most easily 
setup and maintained, Delaware might or might not be the best choice. I 
believe it is one of the batter locations, but that depends on what the 
alternatives consist of.

Incorporation will have little effect on the use taxes, depending on the 
circumstances it may or may not have an effect on any sales tax due. 
But, the use tax is designed to catch what the sales tax misses.

As for the 90 days. Texas is obligated under it's rules to allow a boat 
registered in another state 90 days before requiring registration. 
However, Delaware does not provide registration decals to documented 
boats and if you are a Texas resident and bring the boat to Texas, they 
may not feel that they have to honor the 90 days, especially if you are 
a resident. Florida has this attitude about all boat without decals from 
another state, resident or not.

What I am trying to point out is that attempting to be tricky with these 
issues is harder to apply than it might first appear.



Mike

_____________________________________
Capt. Mike Maurice
Beaverton Oregon(Near Portland)