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Old 12-04-2017, 12:46 PM
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LLC: Selling Personal Property

My LLC buys and sells used books (like a wholesaler). Over the years, my wife's family has given her lots of jewelry that she now wants to get rid of on eBay.

For LLC protection, my LLC will BUY the jewelry from my wife, and then SELL it on eBay under my LLC.

Anything wrong with this?

Logistically: my wife has 10 pieces of jewelry that should sell for $200.00 each. My LLC will cut her a company check for $500.00 ($50 per item) and then list them on eBay under my LLC eBay account.

Of course, at tax time, I'll be giving all this info to my CPA, so if my company makes a profit (e.g. selling all 10 pieces at $200 each = gross profit $1,500.00), my LLC will pay the taxes.

Conversely, if nothing sells, then $500.00 loss.

For some reason, this "feels" awful/fishy/weird.... I'm inclined not to do this. However, when I use the reptilian/logical part of my brain, this seems not only perfectly okay, but a good idea because there's a smidgen more liability protection if the sales are under my LLC!

Your thoughts, please?



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Old 12-06-2017, 01:58 AM
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Join Date: Oct 2010
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Anything wrong with this? =======>I assume the LLC is a MMLLC owned by both you and your spouse NOT an SMLLC(SMLLC means either you or your spouse alone owns I the biz), then, selling goods(no need to sell 'em to your LLC at all) to a business that you are not associated with is different than selling to a business that you own. The IRS is always very wary of "non-arms length" transactions that occur with the later.If this is not a hobby, is this going to be a trade or business in which you are actively engaged in making money?Why would you/ your spouse want to sell them to your LLC instead of directly selling?em on E bay?? which in fact is you, and recognize gain and pay tax? You will need to be able to determine the FMV of whatever you/your spouse are selling and support this if audited by the IRS. I can't imagine what you would be selling that would create a gain, and therefore, why would you not just contribute at your cost basis? You cannot recognize a loss on a related party transaction.
Also when the LLC sells ?em on E bay, then any sale of the jewelry by the partnership,LLC, would be taxable to the you/your spouse, individual partners not the LLC, partnership.

OR,instead if selling?em to the LLC, if you want theLLC to be the owner of the jewerly, then , you will need to transfer the ownership of the title and resport it on your LLC book.
Keep in mind, that partner contributions of property (other than cash) to a partnership/LLC could cause some complicating issues. When the FMV of the asset contributed is different than the adjusted basis, there becomes what is known as a Section 704(c) issue.






You may want to discuss with a tax professional ,i.e., an IRS Enrolled Agent/a CPA doing taxes in your local area to get you started down the right path for your fed/state taxes. As I said previously, there are many issues and different tax consequences that could have long term impact on you.

Logistically: my wife has 10 pieces of jewelry that should sell for $200.00 each. My LLC will cut her a company check for $500.00 ($50 per item) and then list them on eBay under my LLC eBay account.=>>As mentioned above.

Of course, at tax time, I'll be giving all this info to my CPA, so if my company makes a profit (e.g. selling all 10 pieces at $200 each = gross profit $1,500.00), my LLC will pay the taxes.==>your LLC will not pay tax on the CG;both yu and your spouse as partners receive SCh K1 and need to report the gain on your joint 1040.



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