I'm aware of that. My point was that since Warbucks must be a C corp, the following additional things must be considered:

1) personal holding company tax
2) excess accumulated earnings
3) avoiding double-taxation when paying yourself
4) avoiding FICA when paying yourself

In these respects Warbucks/Red Inc. is a more
complex asset protection scheme than a family
LLC strategy. Where can I find information on
such aspects of Warbucks/Red Inc, without
coughing up a few thousand up front?

>Third, you avoid IRS recharacterization by treating
>every entity you create as a seperate entity. These
>entities must deal with each other at arms length,
>just as they would deal with an outsider.

I thought that owning the two entities
was sufficient to be recharacterized, making
the arms-length test unnecessary.

>Fourth, "income shifting" perhaps, but if you so
>arrange your affairs between entities that you
>control at arms length, rather than creating a sham,
>it will not challenged.

My issue was not whether it would be challenged, but
the characterization in your articles as "profit
centers". An entity you control receiving a note
servicing contract from another entity you control
has not created a profit, since self-dealing is
by definition not profit.

Modified by Xenia Merton at Tue, Jan 07, 2003, 13:03:14