Do Nevada Corporations provide significant tax or asset protection benefits?
Over the past five years a multimillion dollar business has been created by promoters extolling the asset protection and income tax advantages which can be achieved with a Nevada corporation. The fact is that all of these supposed benefits are either non-existent or wildly exaggerated.
A Nevada corporation provides no greater asset protection than any other corporation. The supposed secrecy of Nevada law is strictly illusory. The names of the officers and directors of the company must be disclosed on an annual filing with the Secretary of State. It is true that the names of the shareholders are not public record, but the same is true in every other state. If you are ever involved in litigation, the plaintiff’s attorney will certainly subpoena the corporate stock ledger which will disclose your ownership. A plan to have a "friendly" local attorney or agent hold the shares for you will ultimately break down under any degree of scrutiny.
The purported income tax benefits are equally dubious. Income shifted from your home state to Nevada will be subject to the tax allocation rules of your home state which will likely result in a disallowance of the deduction for the amount paid to Nevada Corp. Even if you are not audited, the double tax of the corporate structure will produce a greater overall federal and state tax than would otherwise be payable. Again, the lure of tax savings is nothing more than wishful thinking
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