Private Ownership or Corporate

[Gnat]

I bought a Thompson M1A1 20 years ago and registered it with the ATF in my name. Now that I am getting older I have a question. I also own a ranch that is in a S corporation for which I hold all the stock. Everything we own except for personal autos is owned by the S corporation. If we ever sell the ranch we would not sell the corporation but rather sell the land and cattle. We would keep 320 acres where the house sits but it would still be owned by the corporation. Here is my question. Is it wise to transfer the Thompson into the corporation? The house and homestead will be willed to our heirs in the form of stock in the corporation.

What is best?

Gnat

Edited May 30, 2023 by Gnat

[Varminter]

I believe that as an individual you get a tax-free transfer upon death (Form 5 I believe), so there is that.

However if you want an orderly plan:

Start by looking at a trust:

https://www.silencershop.com/gun-trust.html

Basically you and your trustees can enjoy your NFA items while you're living.  Unlike owning as an individual, they can legally borrow it and take it to their farm to shoot.

If "borrowed" across state lines, fill out a 5320.20

And upon your death:

https://www.nationalguntrusts.com/blogs/nfa-gun-trust-atf-information-database-blog/what-happens-when-a-settlor-dies

Your M1A1 is probably worth 25-30K, so it's a chunk of money.

 

 

 

 

[Dan K]

All of my NFA items & license are in a corporation name. A few reasons:

1. No dealing with estate transfers and paperwork when I die. The corporation can stay alive forever as long as some pays the $30 fee every two years to the state of IN.

2. Anyone in the corporation so empowered can possess/use/transport NFA items.

3. If the corporation is sold, all assets, including the NFA items go with it. No transfers needed. 

I see nothing a trust does that your existing corporation does not and you'll just run up legal fees paying to draw it up.

[AlexanderA]

On 5/30/2023 at 9:23 AM, Varminter said:

I believe that as an individual you get a tax-free transfer upon death (Form 5 I believe), so there is that.

There are also income tax considerations. A Thompson that has been owned for 20 years represents quite a bit of unrealized appreciation in value. If, upon the owner's death, it's "inherited" (that is, if it was held by the owner as an individual, and transfers on a Form 5), then the heirs get a step up in basis to the FMV at the date of death.   This would save them a bunch of money in the event of a later sale.  On the other hand, if it was held by a corporation or under a trust arrangement, there is no "transfer" at death, no "inheritance," and therefore no stepped-up basis. The original basis is carried over.

 

[TD.]

Gnat,

All good information you are receiving. That said, I would use this information as a guide when asking questions to an Attorney who specializes in this type of work. Your M1A1 Thompson is a valuable family asset that you want to pass on or possibly sell without any problems down the road.