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What exactly this means?

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ukrkoz
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Cash: $ 10.20

Posts: 47
Joined: 04 Nov 2010
Location: seattle
What exactly this means?  Reply with quote  

I received an "investment opportunity" email from my employer.
It is supposed to be "clarified" by HQ some time later, I am more curious, if it's even worth considering.
Here's rough sketch of the situation.
Company A, my employer, owns company B, which is manufacturing subdivision of company A, located across the company owned field from HQ. Far as I know, company B is pretty much owned by company A, land it is on included. Field between them is owned by company A also. I worked for company A for 14 years, witnessed all this development.

Here's offer from company A:

[i]an opportunity has arisen for each of you, only should you choose/desire to pursue
Simply put, and we will go through in greater detail during ..........., we have historically purchased the buildings we occupy as individual investors, roll the investors up into LLC’s, and then lease the properties back to company A and/or company B respectively.
. Over the years, these investments have been very beneficial to the individuals whom have chosen to participate, and at this time we have a unique set of circumstances, which allows us to make this type of investment opportunity available to each of you.[i]

This is only a small part of large email, with all the usual plesantires and how HQ cares about our financial welfare. Sent to roughly a hundred of company A and B top employees.

What do you think? All I gather is that they need grass root financing to something, related to company B. Company B been established and slowly grows larger for the last 5-6 years or so. [/b]
Post Thu Feb 07, 2019 7:09 pm
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ukrkoz
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Cash: $ 10.20

Posts: 47
Joined: 04 Nov 2010
Location: seattle
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Bump.
I'll clarify why I am asking this.
Does the entire idea look suspicious or it's some sort of standard business practices that I simply do not understand? Acquire a property via private investors that work for the same company and then lease that property back to them?
Post Sat Feb 09, 2019 3:31 am
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oldguy
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Years ago people would buy a house, own it in an LLC, then rent it to themselves for small amount. The idea was that the house would be classified as a rental - and therefore a depreciable asset that they could write-off on their taxes. Plus all expenses such as repairs, maintenance, insurance, prop tax. The IRS quickly put a stop to that scheme.

This sounds a bit like that scam, except at the company level rather than at the house level. A real estate lawyer could probably tell you in just a few minutes. It sounds convoluted to me, a way for the company to get some unearned tax benefits. Lots of shady sounding phrases - more details later, roll up into LLCs, unique opportunity, very beneficial, yada. If all that were true there would be no need to hide it, they could simply tel you what the opportunity is.
Post Sat Feb 09, 2019 4:03 am
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ukrkoz
Contributing Member


Cash: $ 10.20

Posts: 47
Joined: 04 Nov 2010
Location: seattle
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Exactly my thoughts.
Thank you.
This is why I asked.
They actually sent a spreadsheet out later, promising $580 return/year on $10 000 minimum. As you mentioned, it also may be beneficial in taxable write off as "rental" expense.
That's fine, I am not interested anyway. I have better use for ten K.
Post Sun Feb 17, 2019 6:29 pm
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