Buddy got busted doing this in CA. State interpretations are very important, some view it harsher than others. While it is a loophole, it can still be classified under “tax evasion”. If you get a state/tax audited for whatever reason, you better have a lot of money set aside to hire the best team of lawyers to explain how this “LLC” was created in form of a legitimate company rather than one to specifically avoid taxes.
My friend shelled out thousands of dollars in legal fee’s as well as hefty fine AND paying back the “evaded taxes”. Yes, a lot of exotic car owners do this as it saves them thousands upon thousands however if put in the rare predicament that they do get caught, most of them have the ability to hire a top tier team of lawyers that will get them out of it.
Example above with Trump proves half the situation. Trump is able to use loopholes because he is hiring the best of the best (and most expensive) to “help” him figure out these things and to represent him incase of the worst case scenario happening.
You do not see normal everyday people using the same loopholes used by Trump for a reason; if so this country would collapse. The same reasoning applies to the ordinary person attempting to use the “Montana LLC”.
Will you likely never get busted doing this? Probably, but if you do, make sure you’re also able to pay your way out of it.