Forming a LLC for Collection

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I love numismatics and I collect professionally graded coins (mostly gold and silver).
I buy and sell few coins every month through eBay, coins shows, auctions etc.,
My collection is worth approximately $75,000 and may grow when I add more coins to it.
I own my collection at my home safe (about 300 coins) and I have insurance for my collection through AXA art Insurance company, that covers for theft, damage, fire etc.,

Questions:
1. Is it beneficial to form a LLC to own this collection? Any benefits? (cost about $500 to setup)
2. As I trade coins can I form an LLC and charge the coin show expenses as a business expense?
3. Any tax advantages on doing this?
4. Will the LLC protect my collection from any law suits or judgements against me/my property?
5. How do professional collectors protect their assets (cars/art/coins) etc?
7. Can I get better insurance (rates/coverage) having a LLC own my coins?

Thank you.

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You need o read this IRS article that outlines the inference between a hobby and a business:

https://www.irs.gov/uac/is-your-hobby-a-for-profit-endeavor

WalletFatKing said:   I love numismatics and I collect professionally graded coins (mostly gold and silver).
I buy and sell few coins every month through eBay, coins shows, auctions etc.,
My collection is worth approximately $75,000 and may grow when I add more coins to it.
I own my collection at my home safe (about 300 coins) and I have insurance for my collection through AXA art Insurance company, that covers for theft, damage, fire etc.,

Questions:
1. Is it beneficial to form a LLC to own this collection? Any benefits? (cost about $500 to setup)
2. As I trade coins can I form an LLC and charge the coin show expenses as a business expense?
3. Any tax advantages on doing this?
4. Will the LLC protect my collection from any law suits or judgements against me/my property?
5. How do professional collectors protect their assets (cars/art/coins) etc?
7. Can I get better insurance (rates/coverage) having a LLC own my coins?

Thank you.

  
2.  Yes, but be prepared for any audits that audits that may come your way.
3.  You can expense business related expenses which will reduce your income come tax time.
4.  No.  Anyone can sue for for any reason.  Any judgement against you will force a sale or liquidation of anything you own of value.
5.  With insurance?  With 24 hour armed guards?
6.  H&B?
7.  Probably not.

You're asking "what are the benefits of doing X, I don't know much about it."

You should say "I have this problem Y, what are the ways I can solve it?", and possibly "I understand X can address it but am unclear on this point."

So. What's your problem?

speedracer714 said:   
WalletFatKing said:   I love numismatics and I collect professionally graded coins (mostly gold and silver).
I buy and sell few coins every month through eBay, coins shows, auctions etc.,
My collection is worth approximately $75,000 and may grow when I add more coins to it.
I own my collection at my home safe (about 300 coins) and I have insurance for my collection through AXA art Insurance company, that covers for theft, damage, fire etc.,

Questions:
1. Is it beneficial to form a LLC to own this collection? Any benefits? (cost about $500 to setup)
2. As I trade coins can I form an LLC and charge the coin show expenses as a business expense?
3. Any tax advantages on doing this?
4. Will the LLC protect my collection from any law suits or judgements against me/my property?
5. How do professional collectors protect their assets (cars/art/coins) etc?
7. Can I get better insurance (rates/coverage) having a LLC own my coins?

Thank you.

  
2.  Yes, but be prepared for any audits that audits that may come your way.
3.  You can expense business related expenses which will reduce your income come tax time.
4.  No.  Anyone can sue for for any reason.  Any judgement against you will force a sale or liquidation of anything you own of value.
5.  With insurance?  With 24 hour armed guards?
6.  H&B?
7.  Probably not.

  
Re #4, if you transfer the assets to the LLC, and no longer own them (the LLC does), then those items may be protected from judgments against you. Of course, there are fraudulent transfer laws, and generally you can't make the transfer with the purpose of avoiding a liability.   

Which state are you in?  In most states you'll have continuing annual expenses for the LLC as well as that start-up fee you mentioned.   http://www.llcuniversity.com/llc-annual-fees-by-state/ 

Your # 2 (As I trade coins can I form an LLC and charge the coin show expenses as a business expense?)   Yes but you could do the same with a sole proprietorship.  And regarding audits, it's not that the LLC itself would make you more or less vulnerable to an audit - you'll be just as susceptible as with a sole prop.  What makes you audit bait is your ratio of income vs. expenses, and as mentioned above be aware of the IRS hobby loss rule.

Your # 3 (Any tax advantages on doing this?)   An LLC is a flow-though tax entity like a sole prop., so no IRS pluses or minuses here that I see.  Income flows through to your Form 1040, as does Schedule C (sole prop.).  Beware of any special state tax negatives for LLCs that would not impact you as sole prop.  I think some states put special annual taxes on LLCs.

Your # 7 (Can I get better insurance (rates/coverage) having a LLC own my coins?)  Not sure, but in some cases insurers may insist that you personally guarantee the collection anyway, and you might get the same rate as if you listed it as personally owned (with a separate"schedule") on your homeowner's insurance.

highmktgoods said:   
speedracer714 said:   
WalletFatKing said:   I love numismatics and I collect professionally graded coins (mostly gold and silver).
I buy and sell few coins every month through eBay, coins shows, auctions etc.,
My collection is worth approximately $75,000 and may grow when I add more coins to it.
I own my collection at my home safe (about 300 coins) and I have insurance for my collection through AXA art Insurance company, that covers for theft, damage, fire etc.,

Questions:
1. Is it beneficial to form a LLC to own this collection? Any benefits? (cost about $500 to setup)
2. As I trade coins can I form an LLC and charge the coin show expenses as a business expense?
3. Any tax advantages on doing this?
4. Will the LLC protect my collection from any law suits or judgements against me/my property?
5. How do professional collectors protect their assets (cars/art/coins) etc?
7. Can I get better insurance (rates/coverage) having a LLC own my coins?

Thank you.

  
2.  Yes, but be prepared for any audits that audits that may come your way.
3.  You can expense business related expenses which will reduce your income come tax time.
4.  No.  Anyone can sue for for any reason.  Any judgement against you will force a sale or liquidation of anything you own of value.
5.  With insurance?  With 24 hour armed guards?
6.  H&B?
7.  Probably not.

  
Re #4, if you transfer the assets to the LLC, and no longer own them (the LLC does), then those items may be protected from judgments against you. Of course, there are fraudulent transfer laws, and generally you can't make the transfer with the purpose of avoiding a liability.   

  Your ownership of the LLC is still an asset subject to judgements - while the collection can't directly be taken to satisfy a judgement against you, your stake in the LLC can be taken which achieves the same effect.  

He would be personally protected from any liability the collection might create, since that liability would be isolated in the LLC.  That's the point of an LLC, to isolate potentially risky activity that may result in liability so that only the LLC can be held liable.



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