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Old 08-05-2015, 05:19 PM
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Fixed asset transfer from partnership to s corporation

I know that fixed assets can transfer to a corporation at fmv from a sole proprietorship, but is the treatment the same with a partnership? One unique situation with this partnership is that it dissolved last year with one partner taking over 100% technically making that partner a sole proprietor. Is it possible now to transfer the assets at fmv?



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Old 08-06-2015, 10:24 AM
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I know that fixed assets can transfer to a corporation at fmv from a sole proprietorship, but is the treatment the same with a partnership? ==========>> A sole proprietorship is not an independent legal entity. All business assets of a sole proprietorship are titled in the owner's name, and the owner can do anything he wants with the assets. For example, a delivery truck that is used to make deliveries for the SP actually belongs to the owner. He can decide that he no longer wants to use the truck for the SP and, instead, wants to use it for the SP and trasfers it to a Corp. Under tax rules, you are disposing of the assets by transferring ownership from your SP to the corporation. You must set a FMV on the capital/fixed assets when you transfer them to the corporation so the basis of the assets and any stock received in exchange can be established for tax purposes.




One unique situation with this partnership is that it dissolved last year with one partner taking over 100% technically making that partner a sole proprietor. Is it possible now to transfer the assets at fmv?===============>>>So the MMLLC is now an SMLLC, NOT MMLLC any more; an LLC is an entity that may acquire property in the same manner as a corp / mmllc. The method for transferring assets into the various entities is essentially the same aslongas the asset is used for business purpose.unless the single-member LLC does not elect to be treated as a corp/mmllc, the LLC is a "disregarded entity,I guess you need to make sure you structure the transfer so that the SP, the transferer, does not receive anything in return for the assetfrom the smllc, the transferee, This would be viewed as a sale by the IRS, and thus would have tax implications.

Note; if you are contemplating bankruptcy, dissolution or winding down of the entity, this could be viewed as an attemtpt to hinder, defraud or delay the claims of creditors. If you have shareholders in the corporate context, or other owner/members in the LLC context, you need to make sure that full fmv is paid for the exchange of the assets.



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