question for the cpa's here about corporate ownership

[kdonnel]

I have called our accountant but he is out for the day so I thought I would ask here.

My father-in-law and I are considering buying a DVC membership together. He wants to know if we pay directly from the family LLC's funds instead of doing a distribution and paying from our own funds can we use the membership as a tax deduction?

If all the LLC owners get together once a year at Disney can it be deducted as a business expense for our annual meeting?

How should the deed be titled for maximum tax savings?

 

[SHELL]

I would be very curious of this answer as I am in the same situation!

 

[TnRobin]

I will have to get home to quote you the part of the contract. But here is the idea. DVC contract prohibits the purchase of a DVC membership as a commmercial investment. This will limit you in your potential tax deductions. I believe you will not be able to use it as a corporate dedudtion since the contract you sign indicates you will not be using it for commercial purposes. Of course this would be up to the interpretation of the auditor that sees your records.

You questions as to the membership name etc. are a little to specific. You would need to contact legal representation with specifics about your LLC and what would be the best to minimize your taxes.

I have checked, a member can be either an individual or a corporation.

 

[kdonnel]

Thanks for the quick response.

I am still waiting to hear from our accountant.

The more I think about it though the more problems it may create inside the family as everyone argues over who used more points.

I just need to find a way to pay for it myself.

 

[Dean]

What DVC does is prohibit using DVC as a commercial venture but I don't believe that there is any provision preventing a "company" from buying DVC. It is my interpretation that this wording is there to prevent people from buying many thousands of points and opening a store with neon lights that says "Rent Disney's Vacation Club here" and then using the logos, etc. Though there are those that would like to think this provision applies to an individual renting points to make a profit, I think that's a GIANT stretch and basically wishful thinking. Besides, while DVC may be able to defend use of copyrighted logo's etc, legally they couldn't prevent one renting what they own anyway. There are some tax implications if one is renting more than "2 weeks" per year, but that's another thread.

I am not an accountant and you need to check with your's for your personal situation. In general, I would assume this would be a risky situation much like buying a car through the company that you use mostly for personal use. On the other hand, if you used DVC almost exclusively to wine and dine prospective clients, you might have a defendable situation. Good luck and let us know what your accountant thinks about this.

 

[kdonnel]

I heard from my accountant. She said they could go ahead and schedule my audit. It was almost a sure thing to be audited if the LLC purchased the timeshare interest.

Guess we will just have to do a dispersement.

 

[mikesmom]

...and if you don't use it as a "commercial enterprise" (prohibited by DVC) to what commercial use will the membership be put? My hubby is an accountant and I own a business (also an LLC). He's made it very clear to me that just because I buy something with a company check doesn't mean it's eligible for a tax deduction. Are you using it as advertising? resale? entertainment of clients? If you use it for a shareholder "meeting" you'd best be prepared for the audit.

I'll tell you how tight this can be. I have a car bought with company money. If I drive it, I'd better show the business use and the mileage. If I use it for personal reasons, I have to pay mileage back to the company. If I say it was all business use, I'd better be prepared to show I have a 2nd car for personal use or the IRS will throw out the deduction.

Your accountant's right - it's open season on an audit. Believe me, we thought of this. I have a business in full swing and I even have 2 clients in Florida - DH said don't even try it!

 

[WDWDad]

My boss owns one contract personally and one through his corporation. He has had this set up for the last five years and has never had any problem what so ever.

He uses all of his personal points and some of the companies points, then he either gives away or lets the sub contractors and employees use the rest at a cost below his yearly dues. No one has ever questioned him.