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Old 11-02-2015, 11:20 AM
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LLC formation Tax Question

This is a somewhat complex question and unique to our situation, but any help, commentary, or direction will be much appreciated.

We have a 20 year old small business C corporation. We are essentially doing a management group buyout/restructuring.

We have formed a new Delaware LLC, the LLC will next buy all the Intellectual Property assets of the existing C corporation for a sum of money. We are brining in a new investor and part of that group's capital contribution will be used to execute the buyout of the IP assets.

The C corporation is going to be just an operating entity forward and whatever net revenue will be paid to the new LLC as royalties.

Question, We each have maybe $75K basis in the C corporation stock.

Since this isn't a spin off or dividend, but rather a buyout. Should we look at converting our C Corporation Stock into the LLC at this formation time?

Would that carry our basis over to our contribution to the LLC at formation?



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