Welcome Guest. Register Now!  

LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 10-21-2009, 09:48 AM
Junior Member
Join Date: Oct 2009
Location: Boca Raton, Florida
Posts: 2
Dissolved C Corp xferred in Estate Sells Real Property

Former shareholder (“Gramps”) owned a California "C" corporation with one asset, undeveloped real property with an inside cost basis for tax purposes of $1,000. There was no real income from the property and consequently the “C” corp was not required to file U.S. tax returns. Gramps fell ill and failed to file the necessary paperwork required to keep the corporation in good standing and California administratively dissolved the corporation. Shortly thereafter, Gramps passed away.

In Gramps will, Gramps left the stock of the “C” corp owning the property to his grandson (“New Shareholder”). At the time of Gramps passing, the property was estimated to have a market value of approximately $20M and the “C” corporation stock (given the imputed $8m corporate tax liability at 40%) was estimated to be worth $12M. The estate was settled and presumably paid all pertinent taxes; giving the New Shareholder a “step-up” in the basis of the stock.

Three years later, the market value of the undeveloped property has fallen to $12M. Developer approaches New Shareholder and desires to acquire the real property. New Shareholder (as President of the dissolved corporation) deeds the property to himself, “…for $10 and other valuable consideration.” with the intent to convey the property to the Developer for $12M in the next three months.

Question (1): “Does the administratively dissolved corporation escape the Californian or U.S. Federal Capital Gains tax on the distribution of the property to the New Shareholder?”

Question (2): “If so, would the corporation’s capital gains tax on the distribution be based on the value at the time the estate was resolved (i.e. @ $20M) or the market value at the time administratively dissolved corporation deeded the property to the New Shareholder, personally (i.e. @ $12M) ?”

Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
NY S Corp dissolved several years ago - how do they go after back taxes? StacyR S-Corporation 0 10-14-2009 07:55 AM
Real estate professional offsetting Real Este losses against spouse's W-2 income MRAMANNA Rental Real-Estate 2 03-08-2009 01:49 PM
Unpaid Loans Made to Dissolved S Corp JohnD S-Corporation 4 02-21-2009 10:05 PM
Real estate property tax question optionstrader Rental Real-Estate 1 11-04-2008 09:36 AM
Personal Tax Liens...will it prevent my New C-corp from flipping real estate? marnidog C-Corporation 1 12-27-2007 10:40 AM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 » Income
 » IRA/Sep
 » Medical
 » Payroll
Forum for CPAs
Financial Planning

» Recent Tax Q&A
No Threads to Display.