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Richard, Attorney
Category: Business Law
Satisfied Customers: 53667
Experience:  32 years of experience practicing law and a businessman.
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I want to create an LLC in Utah and then hold a building in

Customer Question

I want to create an LLC in Utah and then hold a building in it. I will be the 99% member of the LLC and my brother in law, a 1% member. Half of the building I will rent and half I will own outright with my payment of a substantial sum of money to the current building owner. If I transfer my 50% ownership of the building into the LLC, will I have tax issues I will need to deal with?
Submitted: 4 months ago.
Category: Business Law
Expert:  Richard replied 4 months ago.

Good afternoon. My name is ***** ***** I look forward to helping you.

No, transferring 50% of the building will not result in any tax consequences. The contribution will be a non-taxable transaction under either Section 351 or Section 721 of the Internal Revenue Code, depending upon whether you elect for the LLC to be taxed as a corporation or a partnership. But, I do wonder why you want to retain 50% of the building in your own name. The LLC's limited liability status protects your personal assets from liabilities of the LLC; if you retain 50% in your own name, to the extent of any problems or lawsuits involving the building, you would be personally at risk.

Thank you so much for allowing me to help you with your questions. I have done my best to provide information which fully addresses your question. If you have any follow up questions, please ask! If I have fully answered your question(s) to your satisfaction, I would appreciate you rating my service as OK, Good or Excellent (hopefully Good or Excellent). Otherwise, I receive no credit for assisting you today. I thank you in advance for taking the time to provide me a positive rating!

Customer: replied 4 months ago.
Thank you. I don't own the other half of the building yet. I only rent half for my business. I own half of the building outright. So in trying to make sure I understand, transferring a real estate asset into my LLC will not trigger tax consequences?
Expert:  Richard replied 4 months ago.

Yes, that is correct. It's a non-taxable transaction.

Expert:  Richard replied 4 months ago.

I just wanted to let you know that I will be away for the evening. Should you have a follow up while I’m away, I will address it first thing tomorrow morning. Thank you in advance for your patience. I apologize for any inconvenience.

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