Frequently Asked Questions: Equishare and Small Advantage
Equishare is Wilson Hand's program for the sale and management of fraction (1/8th) shares in recreational vehicle (RV).
Small Advantage is Wilson Hand's program for the sale and management of ADUs (Boxhouse).
The following frequently asked questions and their relevant responses are designed to assist Wilson Hand's Strategic Partner's in communicating with their clients regarding these programs.
- 1. When will I be getting the K-1 for this? - Since the ADUs are structured with no income and no loan payments for 60 months, no K1 is required to take the deduction for this program. The purchase agreement and promissory note are all that is needed to prepare the disregarded entities’ information returns and allow the business that owns ADUs or RV shares to generate a K1.
- 2. Do I have to “materially participate” to claim the deduction? If a business owns the ADUs or RV shares, there is no material participation requirement. If they are owned by an individual, a minimum of 100 hours of material participation is required. Wilson Hand can assist you in meeting the 100-hour material participation requirement.
- 3. In which state did/will Wilson Hand form the LLC that owns the ADUs or RV shares? The LLCs for ADUs are formed in Wyoming, and the LLC for RV Shares are formed in Montana.
- 4. Who manages the Registered Agent and/or annual filings? Wilson Hand manages the relationship with the Registered Agents for these LLCs and handles any annual filing requirements.
- 5. What documents justify the deduction ($60k Equishare/$300k small advantage)? The purchase agreement reflects the down payment received and full purchase price for the unit(s). In addition, the client signed a promissory note for the difference between the down payment and the balance of the purchase price. The signing of the note creates a qualified debt that makes the full purchase price the client’s basis for tax purposes (down payment + debt on note = fully justified basis)
- 6. How do I know when my unit went into service? The purchased asset is deemed as going into service at the point of sale unless you take possession of the unit and decide to lease it on your own. We recommend using the 3rd party leasing/rental agent selected by Wilson Hand to manage the assets. The 3rd party leasing/rental management company takes immediate possession of the asset and begins the process of setting up the unit for rental.
- 7. How do I set up this unit for rental? If you decide to use the preselected leasing/rental company, you will receive information on how to log in and access your unit’s leasing information as well as information on how to drive traffic to your unit.
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