Transferring a Trust instead of the NFA items

[mdd423]

Is it possible to transfer ownership of a trust with NFA items in it?

Hypothetically
Say you create ABC gun trust. You then Forum 1 a rifle and get a suppressor which are now owned(maybe not the right word) by ABC gun trust. Could you amend your trust to remove your self as a trustee and add some one else to the trust essentially transferring control of the items and avoiding the tax stamp and wait (assuming they were a non prohibited person)?

Would this also work for LLCs or corporation?

Thanks and I hope that makes since.

[mmi]

sounds likes you should use a corporation you can sell them

[GunLawyer001]

Corporations and LLC's can easily be bought and sold, and the assets go with them. Neither of them are organically linked to any particular settlors or beneficiaries the way many trusts are.

That was one of the ideas being bandied around, years ago, before the Johnny-come-lately's read about NFA trusts in Small Arms Review and made an industry of them. Long before that, when the subject of increasing the $200 fee, or barring all future transfers, came up, one solution was to create a separate corp or LLC for each firearm. You could then sell the entity (not just an asset purchase, but the sale of the entire entity) without it meeting the NFA definition of a "transfer". No $200 tax, no paperwork through ATF unless it crosses state lines. So far as the govt is concerned, your ABC Company, Inc, is still the registrant.

Lots of reasons to go with an LLC instead of a trust, that's just one way they're easier.

It has to be pointed out that it's NOT a way for a prohibited person to evade the personal prohibition. If Bob Jones has a felony conviction, he can't legally buy ABC Company, Inc, and take custody of the company's SBR. That's the same reason why the Hollis lawsuits will fail on that issue, because even if a trust is exempt from 922(o), the human beings representing the trust are not exempt. In both cases, a statute saying that the person "shall not possess" something has no exemption for possession through a trust, or corp, or LLC.

It's just as illegal for a felon (or other prohibited person) to acquire NFA firearms through a company, as to buy them out of a car trunk behind a bar.

[mdd423]

Phil, Thanks for the info. Does this mean that Trusts are directly linked to the settler and therefore can not be amended to be under someone else exclusively? Though this serves to only indulge my interest in the law and offers me no practical use I am eager to learn more.
Thanks,
Mitch

Corporations and LLC's can easily be bought and sold, and the assets go with them. Neither of them are organically linked to any particular settlors or beneficiaries the way many trusts are.

That was one of the ideas being bandied around, years ago, before the Johnny-come-lately's read about NFA trusts in Small Arms Review and made an industry of them. Long before that, when the subject of increasing the $200 fee, or barring all future transfers, came up, one solution was to create a separate corp or LLC for each firearm. You could then sell the entity (not just an asset purchase, but the sale of the entire entity) without it meeting the NFA definition of a "transfer". No $200 tax, no paperwork through ATF unless it crosses state lines. So far as the govt is concerned, your ABC Company, Inc, is still the registrant.

Lots of reasons to go with an LLC instead of a trust, that's just one way they're easier.

It has to be pointed out that it's NOT a way for a prohibited person to evade the personal prohibition. If Bob Jones has a felony conviction, he can't legally buy ABC Company, Inc, and take custody of the company's SBR. That's the same reason why the Hollis lawsuits will fail on that issue, because even if a trust is exempt from 922(o), the human beings representing the trust are not exempt. In both cases, a statute saying that the person "shall not possess" something has no exemption for possession through a trust, or corp, or LLC.

It's just as illegal for a felon (or other prohibited person) to acquire NFA firearms through a company, as to buy them out of a car trunk behind a bar.

[BearTHIS]

You would get nailed for tax evasion. Maybe not if you did it once, but it would eventually happen no matter how logical and legal you may think it sounds right now.

[GunLawyer001]

You would get nailed for tax evasion. Maybe not if you did it once, but it would eventually happen no matter how logical and legal you may think it sounds right now.

No, you would not.

In fact, if you sold a corp or LLC that owned an MG, there's no ATF Form to transfer that MG from the company to itself. There's no change in ownership or registration of the MG, it's still owned by the company. There's no taxable event, it's not a "structured" transaction to evade a tax, as long as the company is a bona fide legal entity like a corp or LLC.

This is distinguishable from the Fleming and other incidents, where someone uses an intermediary to evade taxes.

I'm pretty conservative about this sort of thing. I routinely tell people NOT to transfer a handgun to their brother (which requires an FFL) by first giving it to a parent and then having the parent give it to the brother (which wouldn't require an FFL, if it happened to be a genuine sequence.) Those are sham transfers.

There is no sham transaction in selling a company and all of its assets.

The kink in this is because of all those trusts. Because trusts have been sold as Magic Beans that everybody "needs", ATF is responding with new regs, and in the future I'd expect that the new owner of the corp or LLC will be required to change the "responsible persons" list. So, thanks for that, NFA trust guys.

[shademtarmory]

Phil, do you have any case law handy about those sham transfers? We hear people say off and on about transferring a pistol like that (brother to father, then father to other brother). We say it's not recommended to do that but don't really have anything to back it up.

[Dont4get2doubletap]

How about if you still own your llc but you changed locations? Any special stuff to file if it's in the same state?

[shademtarmory]

How about if you still own your llc but you changed locations? Any special stuff to file if it's in the same state?

Change of address/registered office forms with the Corporation Bureau, Dept. of Revenue, and IRS.

[tacticalreload]

I have a buddy who has offered to purchase the PA LLC and the suppressors that go along with it. He has even suggested that he would keep me on the LLC (at least for the time being) so I could have access to the items from time to time. Out of fear of being accused of something sketchy related to tax evasion, I kind of nixed the idea suggesting instead that he transfer the items from the existing LLC to a new one and that the existing LLC be dissolved.

But now that you mention it, I can't understand how there would be any legal issues. However, would he need to file paperwork with the ATF? It can't be as simple as amending the LLC documents to add him, could it? I'd rather go the route of being too conservative rather than the other way around.

The problem with this stuff is that it seems that the powers-that-be often change how they "interpret" regulations depending on which way the wind blows... it's not hard to understand why people are a little gun shy considering the penalties for not walking the straight and narrow.