Transferring domain names to an LLC

[bobovia]

I'm thinking of starting an LLC and transferring names to it.
How would I receive compensation for the names tranferred from my personal holdings to the LLC? Would this be considered a loan? How do i determine the value of each domain being transferred?

[TheLegendaryJP]

Do you have a large enough or valuable enough portfolio to even bother doing that? This is #1 question before going through with it imo.

[bobovia]

LMAO! hell no.

[katherine]

You could issue shares to yourself. It all depends on your business plan - how you intend to use the domain names through the LLC, or what are the benefits sought.

[TheLegendaryJP]

For me I was about fresh out of premium stuff before I open my company so I just started buying via the company from that point on. I still have junk laying around in my name that will expire lol but everything else is now via the corp.

Open the LLC, fund it and start, forget about the junk and dont waste time imo.

[PokerPie]

If the domains are currently in your name and you transfer them to an LLC you are correct that you must receive (and declare) compensation for the domains. However the amount of that compensation could be very small as even among professionals there are huge differences in opinion of what individual domains are worth. To cover your arse in case of an audit you might get a second or third opinion on the record that the value you have assigned to them is accurate - then have the LLC pay you for the domains, or provide you with a note (IOU) for them, if the LLC currently doesn't have any money. You could also loan money to the LLC and then have the LLC buy them with cash - that would be how I would do it. Then pay yourself back with proceeds from future sales or domain parking etc. Each of these structures (and others I didn't think of) would have different tax consequences you should consider.

I'm not a tax attorney, though in speaking with mine about how to structure my LLC my understanding is that the above is pretty accurate. Definitely consult your own professional before making any final decisions though.

P.S. Anybody considering this would be wise to look at the structure Frank Schilling and Xedoc Holdings both have. Not going to say any more on that...

[David G]

P.S. Anybody considering this would be wise to look at the structure Frank Schilling and Xedoc Holdings both have. Not going to say any more on that...

Puzzled about why not saying more about it? After all, this is a discussion forum.

How do we look at that structure?

[Gerry]

If the domains are currently in your name and you transfer them to an LLC you are correct that you must receive (and declare) compensation for the domains. However the amount of that compensation could be very small as even among professionals there are huge differences in opinion of what individual domains are worth. To cover your arse in case of an audit you might get a second or third opinion on the record that the value you have assigned to them is accurate - then have the LLC pay you for the domains, or provide you with a note (IOU) for them, if the LLC currently doesn't have any money. You could also loan money to the LLC and then have the LLC buy them with cash - that would be how I would do it. Then pay yourself back with proceeds from future sales or domain parking etc. Each of these structures (and others I didn't think of) would have different tax consequences you should consider.

I'm not a tax attorney, though in speaking with mine about how to structure my LLC my understanding is that the above is pretty accurate. Definitely consult your own professional before making any final decisions though.

Great assessment.

But each state will have different laws on the books.

LLC's can also protect you, the individual, from personal liabilities.

Definitely look into state laws and get advice from a tax attorney in the state that you plan on incorporating (LLC, etc.)

[PokerPie]

How do we look at that structure?

Look at the WHOIS for any of their domains.

Hint: Why might they have chosen those particular nations instead of their home nations?

[TheLegendaryJP]

Look at the WHOIS for any of their domains.

Hint: Why might they have chosen those particular nations instead of their home nations?

They dont like paved roads and good health care?

[PokerPie]

They dont like paved roads and good health care?

Its not a requirement to live in either of their companies' domicile countries in order to have a business there. I doubt Xedoc actually lives in Luxemborg and as for why Frank lives in the Caymans I can only guess that he's either very paranoid or he just likes the weather.

[TheLegendaryJP]

Its not a requirement to live in either of their companies' domicile countries in order to have a business there. I doubt Xedoc actually lives in Luxemborg and as for why Frank lives in the Caymans I can only guess that he's either very paranoid or he just likes the weather.

True but they are not spending all that income in their " home " contry either, would defeat the purpose of going off shore. I am not sure what exactly the rate is but when you start to bring funds back into the country they want their slice so I bet they withdraw enough to survive but could never truly spend it all and avoid taxation here. For the most part its great but the down side is where you end up having to spend it.

[PokerPie]

True but they are not spending all that income in their " home " contry either, would defeat the purpose of going off shore. I am not sure what exactly the rate is but when you start to bring funds back into the country they want their slice so I bet they withdraw enough to survive but could never truly spend it all and avoid taxation here. For the most part its great but the down side is where you end up having to spend it.

Then pay yourself a salary or dividend from your offshore company and pay taxes on that - if you require more spending money increase the salary or dividend. Yes anything you spend in your home country you are probably going to have to pay taxes on if you don't want to break the law.

If you are a subsistence domainer, earning enough to live on and not much more, this method obviously is not for you. If you earn your living another way and invest in domains or you have a portfolio and income from domaining which far exceeds your spending needs - it might be something worth looking into.

[TheLegendaryJP]

If you earn your living another way and invest in domains or you have a portfolio and income from domaining which far exceeds your spending needs - it might be something worth looking into.

Agreed, this is when it makes sense.