Confidential • Internal Use Only
Legal & Financial Brief
Directives for Counsel and Accounting Partners regarding entity structure, capital stack mechanics, and regulatory compliance.
I Legal Strategy Directives
1. The "Steward / Host" Dual-Entity Structure
Objective: Liability Firewall & Asset Protection
We utilize a split structure to separate the Risk (Operations) from the Asset (Land).
- Entity A (The Steward): A Non-Profit Community Land Trust (CLT). Holds the Deed. Zero employees. Zero operations.
- Entity B (The Host): The Maker's Stay OpCo (LLC). Owns the *improvements* (buildings) and operates the business. Pays lease fees.
Action for Counsel:
Draft a 99-Year Master Ground Lease between Entity A and Entity B. Ensure it contains "Leasehold Mortgage" provisions so the Host entity can secure construction loans against the *value of the leasehold*.
2. Workforce Housing Compliance
Objective: Tax-Free Housing Compensation
Critical Compliance:
To qualify as non-taxable income to the employee (IRC Section 119), lodging must be: (1) On business premises, (2) Furnished for the convenience of the employer, and (3) A condition of employment.
Action for Counsel:
Draft Employment Agreements that explicitly state on-site residence in the "Guild Co-Housing Units" is a *condition of employment* for key operational roles to satisfy IRS Section 119.
II Financial Model
1. Crowdfunding Revenue Recognition
Objective: Tax Deferral
We will receive ~$1.3M in cash upfront (Year 0), but services will be delivered in Year 1-2.
Action for CPA:
Book crowdfunding receipts as Deferred Revenue (Liability), not Income. Recognize as income only upon redemption of the stay. This defers the tax event until operations begin.
2. The "Kit-of-Parts" Capitalization
Objective: Accelerated Depreciation
- Strategy: Aggressive Cost Segregation Study immediately upon completion.
- Goal: Accelerate depreciation on non-structural components (solar, septic, modular fixtures) to offset operating income.
Action for CPA:
Prepare for a Year 1 Cost Segregation Study. Track "Land Improvements" separately from "Building Shell" to maximize bonus depreciation.