A few years back, I got an e-mail from a law Q&A website asking me to sign up, and dangling the prospect of a stream of new clients as an enticement. I signed up, but quickly realized that many of the questions I received were from people not looking to hire an attorney, but simply for some free advice. Even though I rarely answer questions, I still get them. Here’s a sample:

 I own four rental homes in California. I’m considering selling one simply because of the headaches and the fact that the market has risen so much that the profit will make it worthwhile to liquidate now. I’ve been taking depreciation on the 4 homes during tax time each year. If I sell one house, what will the tax implications be on the sale and on my future tax burden?

I’m engaging a partner in a creating an S Corp. with the purposes of the following business pillars: 1) Temporary/Contingent, Permanent, and Outsourcing Labor 2) Consulting small to medium size companies on various strategies 3) Designing, Developing, and releasing an enterprise product. Which type of partnership agreement should we look into and what state will it work best (Nevada or Delaware)?

I am an independent contractor. I give private lessons at a business. The business collects the payments from the students and pays me twice a month. However, they have bounced 2 checks in the last 3 months (I have worked for them since 2007). They have also bounced at least 7 other checks to other teachers (and two employees), including a replacement check for a bounced check. Are there any legal ramifications for multiple bounced checks? Can we require bank checks? Also, what penalties can we assess (other than bank fees) on the owner?

One, not reproduced here, asked for all the possible clauses to put into an estate plan. Seriously?

Here’s the problem with these questions: they lack substantive information from which to base advice. Let’s look at each one in turn.

The first one would require analyzing the individual’s tax returns for several years to give an accurate answer. For example, if the person elected to be treated as a real estate professional, that would result in one answer. If not, the answer is completely different. So…a key element is left out. And without tax returns, how do you quantify impact on future taxes?

The second one starts out by stating they’re forming an S-Corp (one type of business entity) and finishes by asking what kind  of partnership (a completely different entity) agreement they should have and from what state. Most likely, they’re forming an S-Corp, and want to know 1) where to get bylaws, and 2) where to form the corporation. “Where should I form” is driven by a lot of considerations, not the least of which is the answer to “where would you like to be sued?” And why Nevada or Delaware, anyway? Why not California? Possibly because of California’s LLC tax, but if that’s the case, that’s a whole other discussion. In any event, this guy needs at least an hour – and probably a two hour – consultation to suss out all the relevant information.

The last one is contract-driven; without the contract, it’s impossible to say what other remedies might be available. This one I actually responded to, briefly. Turns out, the business is under new ownership, and the old owners had a contract with this person, while the new owners do not. In other words, it got much more complex on follow up than it might have seemed at first.

And that’s why you shouldn’t seek free advice on the internet – from lawyers or anyone else. It’s worth what you paid for it, and the answer you get may wind up costing you more than had you spent $400 for an hour long consultation.

If you have a business or tax question, contact our office to set up a paid consultation. We’ll be happy to do our best to assist you.