6 | May 28 - June 10, 2021 | THE LOG
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LEGAL ADVICE
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Should I buy the boat through an LLC?
QUESTION:
I am considering the purchase of a boat that is titled in a Delaware LLC. I have completed sea trial and survey and we are preparing to close pursuant to the provisions of the yacht purchase agreement, but the broker suggested that I consider the purchase of the LLC itself. He indicated that this would allow me to avoid payment of California sales or use tax and to continue the liability protections that are available through LLC ownership. Can you offer some guidance as to the significant issues that I should be aware of in this type of transaction?
ANSWER: We are often asked to comment on the pros and cons of ownership of a boat by a corporation or LLC, and I will note at the outset that it’s not for everyone. However, before we get into the pros and cons of owning or buying a boat through a business entity - whether a corporation or LLC - we need to address a logistical issue raised by our reader. He indicated that the parties are preparing to “close” the deal pursuant to the provisions of the vessel purchase agreement, but that he is now considering the purchase of the LLC that owns the boat. He needs to slow down a bit. If the parties close pursuant
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NO. 1155
MAY 28 – JUNE 10, 2021
W R ITE TO:
to the provisions of the vessel purchase agreement, the LLC won’t own the boat anymore, since the purchase agreement calls for the current owner to sell the boat to the buyer. The buyer would therefore own the boat in his own name rather than in the name of the LLC, and he would be purchasing a company with no assets. If an LLC purchase is being contemplated, the parties should put the brakes on the vessel purchase - - - if that’s possible. At this late date the buyer is likely obligated to purchase the boat or risk losing his deposit for breach of
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BW to pracDavid Weil is licensed tice law in the state of California and as such, some of the information provided in this column may not be applicable in a jurisdiction outside of California. Please note also that no two legal situations are alike, and it is impossible to provide accurate legal advice without knowing all the facts of a particular situation. Therefore, the information provided in this column should not be regarded as individual legal advice, and readers should not act upon this information without seeking the opinion of an attorney in their
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home state.
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She’s a Yankee Doodle Dandy, She’s a Yankee Doodle Girl Lola, a 3-yearold Rhodesian Ridgeback, enjoys the day on the sun deck of the Yankee Belle, a 42-foot Symbol in Dana Point Harbor.
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Back to Their Favorite Haunts In an April trip down to Baja, Sur, Vince and Pat Flynn brought along their 50th anniversary edition of the Log. The Flynns are posed in front of their Boston Whaler, Sakonnet, which means “haunt of the wild black goose,” which they use for fishing and cruising when they are in the area. “Vince and Pat Flynn, of the Coronado Yacht Club, traveled to Coyote Bay, April, 2021,” said the May 1 submission. “In the background is their 1963 Boston Whaler, Sakonnet, which they have had since 1971, and use it for cruising and fishing in the Mulege area, Baja, Sur.”
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Sunset Views Sussie, an Alaskan Malamute and avid boater, enjoys the sunset sitting on a soft ice chest while returning from all day tuna trip offshore.
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