I am helping my dad preparing his S-Corp return. In the past year. He has transfer some investment properties from LLC 1 to LLC 2 by filing a Quit Claim Deed. There is no money transfer from the First LLC to the Second LLC.
My question is, is there any tax liability from the First LLC by transfer the properties to the Second LLC.
Can the second LLC use the same Cost Basis of the properties as the transfered directly from the First LLC?
Thanks,
Kev
I've already tried...
Answers
.
.
He is the only Shareholder on the S-Corp.
So, another words. If the FMV is higher than his Cost Basis for X company. Then, there will be tax liability for X in 2009.
Then, the new Cost Basis for Z would be the FMV. Treating Z purchased the properties from X.
Please let me know if my assumtion is wrong.
Thanks, again.
Kev
Expert
Hi Kev,
My question to you is as follows, is he the majority shareholder of BOTH S-Corp's ?
As far as I am aware of there is no " transfer " of property in the tax code, the property was " sold " from X to Z, the FMV of the property was ? The cost basis at time of transfer was ?, then the new cost basis to Z after transfer was ?
How is he directly involved (shareholder wise) in the LLC 1 and LLC 2 ?
What was the purpose of the transfer ? (if this is a private matter you can either email me directly or maybe call me) ?
Is there a mortgage attached to the property in question ?
Thanks,
Paul Dolnier
You're welcome to leave a review.
About the Expert
ANY IRS tax problems or issues contact me directly and FIRST before you call IRS back or any state tax dept. I watch your tax rights and insure a FAIR resolution of your unique tax issues, problems or any tax issue what so ever Best and LOWEST retainer around and we work directly with all types of clients and from all different areas of the country. HIRE a " former IRS Revenue Officer " to protect your tax rights today !! View Profile
I was wondering why the transfer of the property actually took place ? It seems like he controls both S-Corps then this transfer was done basically " on paper " since he had control over it at the begining and control over it at the end as well.
If there was a " gain " on it after the cost basis was reviewed and depending on how long the first S-Corp onwed the property they may have a capital gain to report, if the property had a gain, and they did not want to be taxed on it, they could do a Section 1231 property exchange, one property for another same type of property, then the gain would " follow " the property to the new property and when that property was sold, it would be reported and taxed then, over it could possibily be " exchange again " for another piece of same type property etc.
When it comes to real property it gets a bit complicated, unless I had some more facts, it would be difficult to advise what do to or how to report it without knowing more specific issues.
if you want to call me I would be happy to discuss this in more detail with you.
Thanks,
Paul Dolnier
If this information is helpful, please write a positive review on this site.
Please login or register to rate this answer!