Premise: Completely paid off home, rural zoned, no subdivision, no home owner association, no issues whatsoever, home will not be sold for generations, so there will be no home history issues one day.
A large group of friends and us have been paying for Airbnb places for our Book Club meetings, but the prices skyrocketed and we are thinking since our fully paid off home is in a rural zone, away from subdivisions and neighbors, that we could register an LLC there, then continue doing what we were doing, only instead of to Airbnb, our friends (invited guests) and us would all continue paying for the venue where we meet, while paying taxes on all proceeds.
Assume large groups of people, assume frequent Book Club Meeting generating [large] sums of money, because if we assume small sums of money then this thread would be less relevant.
To do this legally, we are thinking of forming one or two LLCs.
Reason 1: If the title of the home is under an LLC, this would protect the home from being taken away from us should someone sue because they a.) slip & fell b.) a guest injured another guest through no fault of our own, but we provided the venue.
Reason 2: If we just took the money, we could be shut down. If we on the other hand formed an LLC, it could do exactly what Airbnb is doing: collect money and pay taxes on it, making it less likely that someone can shut us down, assuming no other issues whatsoever of course, but for reasons of unreported income, would this take care of it?
Do we form one LLC, put in on the house title and use it to collect the money?
Or form two LLCs, one on title, the other to collect money?
Here's the Tax Law question: When we pay taxes on this income, can we deduct purchases for the Book Club, furniture for Book Club's exclusive use, tables, chairs, etc. Since the home would be both a primary residence and a Book Club, what is the procedure to separate the two, to be able to use tax deductions on Book Club's proceeds?
I asked this on another forum and was told that home may have issues at time of future sale one day and they didn't understand the necessity of forming an LLC. So: home will not be sold, and for purposes of this thread, can we assume a large sum of $ will be collected, and we would like to report it, pay taxes on it, thereby making it difficult for the Book Club to be shut down over unreported income issues. Also as mentioned, real concern are liability issues, so that's also why we are considering formation of LLCs for all this.
Thank you for your advice.
A large group of friends and us have been paying for Airbnb places for our Book Club meetings, but the prices skyrocketed and we are thinking since our fully paid off home is in a rural zone, away from subdivisions and neighbors, that we could register an LLC there, then continue doing what we were doing, only instead of to Airbnb, our friends (invited guests) and us would all continue paying for the venue where we meet, while paying taxes on all proceeds.
Assume large groups of people, assume frequent Book Club Meeting generating [large] sums of money, because if we assume small sums of money then this thread would be less relevant.
To do this legally, we are thinking of forming one or two LLCs.
Reason 1: If the title of the home is under an LLC, this would protect the home from being taken away from us should someone sue because they a.) slip & fell b.) a guest injured another guest through no fault of our own, but we provided the venue.
Reason 2: If we just took the money, we could be shut down. If we on the other hand formed an LLC, it could do exactly what Airbnb is doing: collect money and pay taxes on it, making it less likely that someone can shut us down, assuming no other issues whatsoever of course, but for reasons of unreported income, would this take care of it?
Do we form one LLC, put in on the house title and use it to collect the money?
Or form two LLCs, one on title, the other to collect money?
Here's the Tax Law question: When we pay taxes on this income, can we deduct purchases for the Book Club, furniture for Book Club's exclusive use, tables, chairs, etc. Since the home would be both a primary residence and a Book Club, what is the procedure to separate the two, to be able to use tax deductions on Book Club's proceeds?
I asked this on another forum and was told that home may have issues at time of future sale one day and they didn't understand the necessity of forming an LLC. So: home will not be sold, and for purposes of this thread, can we assume a large sum of $ will be collected, and we would like to report it, pay taxes on it, thereby making it difficult for the Book Club to be shut down over unreported income issues. Also as mentioned, real concern are liability issues, so that's also why we are considering formation of LLCs for all this.
Thank you for your advice.
Federal Taxes: Paying Taxes on Book Club Proceeds and Using Deductions
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