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Old 12-13-2016, 04:31 AM
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Transfer real property from C corp

Hello,

Sure would appreciate some help figuring this out:

NY C Corporation ABCD owns real property called BUILDING

ABCD has 4, 25% shareholders: A B C and D

A sells its share to X in year 1 for $10,000

B sells its share to X in year 3 for $40,000

C and D sell its share to X in year 10 for $20,000 each

(Summary: X has paid $90,000 in total over the years and owns 100% of the shares of ABCD)

X wants to move BUILDING out of the corporate ownership of ABCD and own it personally.

Each of the transactions above were at fair market value.

BUILDING has a current fair market value of $100,000.

How can X avoid creating a capital gains tax liability for either ABCD or himself?

Thank you



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Old 12-13-2016, 02:39 PM
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when there is an asset sale of a C Corp., the c corp owned b/d , an asset sold is compared to its depreciated basis and the difference is treated as ordinary income to the C Corp. Any good will is a 100% gain and again is treated as ordinary income. The corp pays this tax bill and then there is a distribution of the remaining funds to the shareholders. They are taxed a second time at their long term capital gains rate.You as a buyer of the C corp asset of building does not pay tax.You?d pay long term capital gain tax/ ordinary gain tax when you sell it at a gain.



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Old 12-13-2016, 03:01 PM
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Join Date: Dec 2016
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Quote:
Originally Posted by Wnhough View Post
when there is an asset sale of a C Corp., the c corp owned b/d , an asset sold is compared to its depreciated basis and the difference is treated as ordinary income to the C Corp. Any good will is a 100% gain and again is treated as ordinary income. The corp pays this tax bill and then there is a distribution of the remaining funds to the shareholders. They are taxed a second time at their long term capital gains rate.You as a buyer of the C corp asset of building does not pay tax.You?d pay long term capital gain tax/ ordinary gain tax when you sell it at a gain.
Not sure I fully understand, but here goes:

I don't believe there has been any depreciation taken over the year by the corp. Regardless, the purchase price decades ago was so small, there wasn't much to depreciate.

and I don't believe there's any good will.

I would like to transfer the property from the C corp to me (X in my example) and not incur a capital gains liability for the c-corp (which, being the sole shareholder, would come out of my pocket).

But I don't know how.

Thank you!



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