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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Legal
Satisfied Customers: 118789
Experience:  JA Mentor -Attorney Labor/employment, corporate, sports law, admiralty/maritime and civil rights law
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My wife runs two home based businesses. One is an LLC and has

Customer Question

My wife runs two home based businesses. One is an LLC and has been successfully operating for 8 years or so. It is solely intangible goods, design, digital files, websites, etc. It also has very little expense. The other is a new business, a plant nursery with retail sales, began 2014 with quite a bit of expense, but no income, until this month. It will be a high expense to income business for a while and I don't expect it to show much if any profit this year. Our tax person is handling the two businesses separately and is deferring the expenses of the new business until it shows income. Question1: Can the two businesses somehow share expenses and income - making the new business part of the old's LLC?
Question2: The new business, the nursery, in part sells plants harvested from 4 of our 5 acre property. These are wild grown plants. She does have permits in place from FL state, making the harvest legal. The only private use we have of these 4 (more like 3+) acres is looking at them as they are heavily wooded. Is there a way to capitalize on this in tax deduction terms? Perhaps rent the property to the company? We own the house and land outright - so there is no mortgage to deduct.
Submitted: 1 year ago.
Category: Legal
Expert:  Law Educator, Esq. replied 1 year ago.
Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only.
1) In order to preserve the corporate veil protection of the LLC, no, she cannot share or commingle funds of the two LLC. She needs to keep them completely separate. If she mingles the two, then the corporate veil is destroyed and if she is ever sued the liability for damages can be held to be on both LLC and possibly even her personally.
2) Renting the property for agriculture is a potential deduction. Also, seeking federal assistance for tree farming is another possible deduction. If you lease the property to your LLC, you end up having personal income and the LLC has a deduction for rent paid, so you need to determine how much the LLC is earning to determine whether or not it is more to your benefit for the LLC to pay the rent.
Customer: replied 1 year ago.
In point one, you have both businesses as LLC. Only the original business is. Does this change your answer?
Expert:  Law Educator, Esq. replied 1 year ago.
Thank you for your reply.
You do not want to commingle the businesses, regardless of their corporate form, again that leads to loss of the protection of the corporate veil. This is why the accountant is treating them completely separately.