How does the "Corporation Loophole" work?

PaladinX13 · February 5, 2001, 11:40 PM

I already have a S-type Corporation, does this save me any trouble in obtaining NFA or Class III weaponry? On the Serbu website they allude to a corporation loophole but what are the specifics?

Robert the41MagFan · February 6, 2001, 02:37 AM

Only way a Corporate entity can obtain a NFA weapon is that corporation must also have a Class III license.

Robert

TaxPhd · February 6, 2001, 08:47 AM

I may be wrong, but a "class 3 license" is not needed to purchase NFA items. Form 4, tax stamp, and chief LEO signature are needed.

The corporation loophole is that corporations do not require the chief LEO signature, so in jurisdictions where the chief LEO will not sign off, having a corporation make the purchase gets around this.

The downside is that if the corporation is ever dissolved, the weapons must be sold or otherwise disposed of.

As to whether a sub S corp. will work, I don't know.

Jeff Thomas · February 8, 2001, 03:15 AM

I'd be very surprised if S Corporation status is pertinent. That is a tax concept (as I imagine TaxPhd knows ...), not an otherwise legal concept for corporations.

An S Corp is just a regular corp with a special tax election.

Now, what would you all it ... Tommy, Inc.?

Regards from AZ

February 6, 2001, 08:47 AM	#3
TaxPhd Senior Member Join Date: October 29, 1998 Location: Colorado Posts: 534	I may be wrong, but a "class 3 license" is not needed to purchase NFA items. Form 4, tax stamp, and chief LEO signature are needed. The corporation loophole is that corporations do not require the chief LEO signature, so in jurisdictions where the chief LEO will not sign off, having a corporation make the purchase gets around this. The downside is that if the corporation is ever dissolved, the weapons must be sold or otherwise disposed of. As to whether a sub S corp. will work, I don't know. __________________ TaxPhd "Those who live by the sword are probably pretty f***ing good at it." "Instructions for a successful gunfight: Front Sight, Press Trigger, repeat as necessary." - B. Braxton

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February 5, 2001, 11:40 PM	#1
PaladinX13 Senior Member Join Date: September 6, 2000 Posts: 519	I already have a S-type Corporation, does this save me any trouble in obtaining NFA or Class III weaponry? On the Serbu website they allude to a corporation loophole but what are the specifics?

February 6, 2001, 02:37 AM	#2
Robert the41MagFan Senior Member Join Date: November 18, 1999 Posts: 1,233	Only way a Corporate entity can obtain a NFA weapon is that corporation must also have a Class III license. Robert

February 8, 2001, 03:15 AM	#4
Jeff Thomas Senior Member Join Date: December 9, 1998 Location: Texas Posts: 4,753	I'd be very surprised if S Corporation status is pertinent. That is a tax concept (as I imagine TaxPhd knows ...), not an otherwise legal concept for corporations. An S Corp is just a regular corp with a special tax election. Now, what would you all it ... Tommy, Inc.? Regards from AZ