Business purchasing DVC

[APiratesLifeForMe2]

Ok this is mostly curiosity but does anyone know if a business can own DVC? For instance to use for a business retreat with a few employees or possibly even rewarding some employees with a hotel stay.

 

[disneynutz]

Yes they can.

Bill

 

[APiratesLifeForMe2]

Yes they can.

Bill

Awesome!

 

[drusba]

I remember years ago during the post 9/11 recession that there were a number of 2,000 point contracts (the highest number of points a member could own at any single resort) on sale in the resale market and when I inquired I found out that those were mostly contracts owned by corporations. Before you purchase as a business be sure to discuss the applicable expense and income issues with your accountant so you know what they are, e.g., if you reward an employee with a trip that employee may have to declare some amount as taxable income.

 

[kniquy]

I believe that a business could buy DVC, but I would think there would have to be an individual owner(s) listed. Those people would be the only ones who could receive the benefits and make reservations. I guess that would be one good business write off!!

 

[erionm]

I believe that a business could buy DVC, but I would think there would have to be an individual owner(s) listed. Those people would be the only ones who could receive the benefits and make reservations.

From the Member website:
"Corporate Member"
A "Corporate Member" is a corporation, LLC or partnership that purchases a real estate interest and is named on the deed.

"Officer"
An Officer is a person who has been authorized to execute the purchase documentation on behalf of a corporation, LLC or partnership that owns the real estate interest. An Officer is entitled to all benefits and privileges that are available to a Member and will receive a Membership Card. Officers may also access Annual Dues and/or Loan information and make payments on behalf of the Corporate Member.

"Affiliate"
An Affiliate is a person named by the Officer who is authorized to make reservations using the Corporate Member's Home Resort Vacation Points. All Affiliates must be an officer of the corporation, a member of the LLC or a partner of the partnership that owns the real estate interest. Affiliates are entitled to receive the benefits and privileges of a Member and are issued a Membership Card.

However, Affiliates may not access financial information related to the Annual Dues and/or Loan pertaining to the Corporate Member's real estate interest.

https://disneyvacationclub.disney.go.com/faq/member-types/rights-privileges/

 

[APiratesLifeForMe2]

Thanks everyone. All great information.

 

[Dean]

Ok this is mostly curiosity but does anyone know if a business can own DVC? For instance to use for a business retreat with a few employees or possibly even rewarding some employees with a hotel stay.

The one thing you have to be careful about is to not own it as a business expense and use it for personal for the principles. As soon as you start writing off a timeshare the IRS is likely to look real hard at this and often other issues as well. This was the very nature of the old Cooper Shares resort system which morphed into Escapes and is now part of the Holiday Inn system.

 

[Friendlyadvice2]

The one thing you have to be careful about is to not own it as a business expense and use it for personal for the principles. As soon as you start writing off a timeshare the IRS is likely to look real hard at this and often other issues as well. This was the very nature of the old Cooper Shares resort system which morphed into Escapes and is now part of the Holiday Inn system.

Agreed. I'm aware of at least 4 criminal tax prosecutions (not civil audits) last year alone that had a component of fraudulent "business" timeshare write-offs (along with other more material issues) and 2 of those were actually DVC contracts. It's the typical, "lets buy a timeshare in the name of our business and use it strictly for personal use" so we can expense it to the business to offset our income. We may as well expense our tickets and heck, lets add the dining plan and expense that too. The problem with IRS finding it however, is that on the surface of a Schedule C, 1065, or 1120s its usually buried in some other line item and only discovered while looking at other more significant issues.

 

[DVC Doctor]

Agreed. I'm aware of at least 4 criminal tax prosecutions (not civil audits) last year alone that had a component of fraudulent "business" timeshare write-offs (along with other more material issues) and 2 of those were actually DVC contracts. It's the typical, "lets buy a timeshare in the name of our business and use it strictly for personal use" so we can expense it to the business to offset our income. We may as well expense our tickets and heck, lets add the dining plan and expense that too. The problem with IRS finding it however, is that on the surface of a Schedule C, 1065, or 1120s its usually buried in some other line item and only discovered while looking at other more significant issues.

I am pretty sure they do not teach "Buying a timeshare for your Business" in MBA school

 

[Friendlyadvice2]

I am pretty sure they do not teach "Buying a timeshare for your Business" in MBA school

I don't know, it's been awhile but, I think they may have added it to curriculum in the section that explains how to properly "entertain clients" at various "clubs".

 

[DVC Doctor]

I don't know, it's been awhile but, I think they may have added it to curriculum in the section that explains how to properly "entertain clients" at various "clubs".

I would think there are better "clubs" to entertain clients at.....

 

[crisi]

I am pretty sure they do not teach "Buying a timeshare for your Business" in MBA school

I was specifically taught "don't buy a timeshare for your business" in tax school. Too risky. Can be legal, usually isn't, and the IRS seems to have a particular in for this one.

 

[APiratesLifeForMe2]

I was specifically taught "don't buy a timeshare for your business" in tax school. Too risky. Can be legal, usually isn't, and the IRS seems to have a particular in for this one.

I guess it's easy for executives and business owners to use it themselves and justify it in their minds as a business expense.

 

[Dean]

I guess it's easy for executives and business owners to use it themselves and justify it in their minds as a business expense.

Businesses used to buy cars for their "employee's" as a business expense. There certainly are situations where it can be justified and a legitimate business expense but one has to use it consistently for that purpose. It's a little like box seats at sporting events and the like.

 

[crisi]

I guess it's easy for executives and business owners to use it themselves and justify it in their minds as a business expense.

Yep, The issue is that if you have a small business and use the timeshare for employees, and your employee is your spouse - that doesn't pass the use test. Nor does your kid, or your uncle, or your friend who owns 30% of the business. If the timeshare is always used for employees who are arms length away from ownership (not related to the owners) and the owners never use it themselves, then you are (in my understanding, and its been a while since I looked) good, but the moment one of the owners or one of the relatives of the owners (who happens to be an employee) uses the timeshare, its fair game for the IRS to claim fraud.

Similar rules are in play if you use it to entertain clients. Your clients had better not be your brother in law or your best friend.

For a small business owner, it usually isn't the case that they are rewarding arms length employees with vacations - its usually a way for the family to write off family vacations - and even when the intent is good, for a small business, its too tempting (and confusing) when Bob from Accounting has to cancel his legitimate reward vacation and the points will be lost not to take advantage of it. For large corporations, a timeshare is too much of a headache to operate for that purpose - there are travel agencies that exists for the sole purpose of employee reward and recognition travel and scheduling client entertainment boondoggles.

As always, talk to your own tax professional. Tax advice over the internet is worth what you paid for it. I could be a monkey randomly typing on the keyboard.