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Donna Genie explains why campground owners split into two entities: one holds the land and buildings, the other runs operations. This creates legal barriers that protect assets from liability claims and makes tax planning easier when you sell.
Donna Genie explains why campground owners split into two entities: one holds the land and buildings, the other runs operations. This creates legal barriers that protect assets from liability claims and makes tax planning easier when you sell.
Are you using the optimal entity selection for your campground? Well, many cases we utilize two separate entities in the campground structure. One for the ownership of the park's assets, like the land, the buildings, the equipment. Another for the operations of the park. Now, why do we do this? There are two reasons. First, taxes could be an issue. Secondly, we want to protect you from legal liability. The legal issue is the bigger of the two items and the reasons we separate them. Whenever someone sues about whatever it may be, the outcome is that you either pay out money, you have the insurance company pay out money, or you could be looking at a judgment. In those cases, when we're talking about an overruling judgment, the judgment allows that person to attach any assets that the entity owns. So if we're talking about something that happens based on operations, they can only take what the operations entity owns. Now, if it's a bigger issue that extends into the property and they can prove that basis, they may be able to dive a little deeper and get into the assets of the asset holding entity of the company. But that takes work. And what we want to do to protect you in a legal situation is always put roadblocks in the way of somebody who could be suing you, make it harder for them. So it's not an easy deal where they see a lot of money sitting out there on the table waiting for them. The other reason that we look at separating the two entities could be for tax purposes. Now, this is completely dependent on each person's individual situation, but we can structure for some creative tax moves by using two different entities. We can also set up some protection of when you sell or transfer assets nearing the end of your ownership of the park. So. So those are really important things that you ought to have good, solid advice on if you're in need of looking at your entity structure and making sure that it's the proper structure and the most efficient structure for you. I'd be happy to help. I'm Donna Bordeaux with campgroundaccounting.
Sam.
