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Stephen G.
Stephen G. , Sr Financial Expert
Category: Finance
Satisfied Customers: 5999
Experience:  Extensive Experience with Tax, Financial & Estate Issues
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I have a property that could be put in my business name. If

Resolved Question:

I have a property that could be put in my business name. If I sold the property and made a profit could I take the money from that sale and pay off other debt in the company without having to pay long term capital gains tax? I have owned the property in question for more than a year. The debts that I have are loans on another property that is owned by the business.
Submitted: 2 years ago.
Category: Finance
Expert:  Stephen G. replied 2 years ago.

Stephen G. :

Hello, my name isXXXXX & I'll be helping you today. My goal is to give you a complete & accurate answer that you can understand.

Stephen G. :

Unfortunately no. What you do with the proceeds of the sale won't shelter the capital gain on that sale.

Stephen G. :

Do you have a substantial capital gain?

Customer:

It would be around 120000 in profit

Stephen G. :

What type of organization is your business?

Customer:

it is an llc

Stephen G. :

OK, but how does it file it's income taxes?

Customer:

as a partnership

Stephen G. :

So you own the property that you are selling, but you have other partners in the partnership?

Customer:

Right now the property is in my name and my wife's name. We bought the property over a year ago and did substantial improvements on the property. We do not have any other partners in the partnership, just my wife and I

Stephen G. :

Are you taking back any financing on the sale?

Customer:

no it would be a cash sale

Stephen G. :

And the gain you are figuring is after giving credit for the improvements?

Customer:

yes, plus there would be realtors fees that we would have to pay, but I figured those into the equation to come up with the profit number

Stephen G. :

Unfortunately, in order to have unlimited access to the proceeds from the sale, you'll have to pay the tax.

Customer:

and the tax would be based on my tax bracket since I have had the property for longer than a year, correct?

Customer:

so there would not be any advantage to putting the property in the business name and selling it that way compared to selling it under our names as the owner?

Stephen G. :

Well, it would be a capital gains rate, which rate would be based upon your tax bracket.

Stephen G. :

No. As a partnership, that is considered the same as owning yourself anyway.

Customer:

okay thank you for your help with this question

Stephen G. :

How long have you been using the partnership method for filing the llc taxes?

Customer:

since 2006

Customer:

why?

Stephen G. :

OK, oh there are now ways to eliminate filing a partnership return for Husband - Wife partnerships, but it involves splitting everything and filing 2 Schedule Cs, so in your case it may be more cumbersome anyway.

Stephen G. :

I'll leave my contact information here in case you have any future questions I may be able to help you with.

Customer:

ok great.

Stephen G. :

If you want to contact me again with any tax or financial questions, you can just ask for "Steve G" at the beginning of your question. Thanks again for using us for your tax and financial questions. You may get a short survey from the site; if it isn't too much trouble I would appreciate it if you would answer it; the survey results are used to rate our performance;

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