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Old 02-20-2018, 10:19 PM
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Buying a Building

C corp is a moving company and wishes to buy its own building. It is unwise to hold real estate in an operating corp, so a separate entity is established to hold the property (usually an LLC). How does the Corp buy the land/building and then title it in the LLC? Can one entity simply "give" property to another with no tax ramifications? Maybe I am making this harder than it is. Is it as simple as deeding the property at closing?



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Old 02-20-2018, 11:42 PM
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C corp is a moving company and wishes to buy its own building. It is unwise to hold real estate in an operating corp, so a separate entity is established to hold the property (usually an LLC). How does the Corp buy the land/building and then title it in the LLC=====>first of all, I guess you need to know why You Should Never Hold Real Estate in a C Corp SINCE Capital Gains Taxes Will be Higher When Selling; Asset Protection is Not as Secure for Property Held in a S or reg C Corp in Most States; Transferring Property Out of a s or C Corp is Taxable.so, you neeed to contact an attorney to prepare a deed to convey the desired real property.you also need to sign the deed transferring the property to your LLC in the presence of a notary public who will acknowledge your signature, I guess. You must put your property in the company name to transfer it to a LLC. Create a document showing you donated the property to the company. File the completed deed in the deed records for the county where the property is located and pay any filing fees due. Record a deed transfer with your county clerk showing the company now owns the property.

Can one entity simply "give" property to another with no tax ramifications? =======>> You can transferit into an LLC without immediate tax consequences. just because tax consequences aren't immediate, it doesn't mean they won't arise later. The tax complications will almost certainly require getting expert tax advice before making the transfer. If the property being transferred is mortgaged, assuming your lenders will allow it, you will also need to periodically readjust the basis of ownership by the LLC itself and of the participants' individual ownership shares as the loan is paid off Transferring property to an LLC can have unforeseen consequences. If you hold a piece of property you had earlier purchased for $200k and the market value at the point of transfer is $400k, that's the valuation at the moment of transfer, not the tax basis. The property's basis doesn't magically reboot when you make the transfer. Assuming you haven't paid taxes on the gain -- and only exceptional circumstances would make that likely -- along with the property, you've also transferred a tax liability for the $200k property gain to the LLC. This isn't a problem if you're the only person with an interest in the LLC. If other stakeholders are involved, you'll need to consult them, and you'll probably need legal advice about making the terms of the transfer equitable.



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