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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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A privately held corporation owns a business and all of its

Customer Question

A privately held corporation owns a business and all of its assets. The 2 owners of the corporation want to sell the corporation and all of the business licensing and processes. However, they want to retain the assets owned by the corporation.

Can an LLC be formed to be the owner of the assets and then lease the assets to the current corporation which will have new owners?

How is the ownership of the corporation transferred to the new owners?

How does the LLC obtain ownership of the assets?
Submitted: 2 years ago.
Category: Tax
Expert:  Lev replied 2 years ago.

Hi and welcome to Just Answer !

 

The 2 owners of the corporation want to sell the corporation and all of the business licensing and processes. However, they want to retain the assets owned by the corporation.

There are two ways to sell the business that is organized as a corporation - (1)sell shares of the corporation or (2)dissolve the corporation and sell assets. Each method has advantages and disadvantages for either a seller and a buyer.

To retain the ownership of all or some assets - these assets should be either distributed before the corporation is sold or purchased from new owners.

Can an LLC be formed to be the owner of the assets and then lease the assets to the current corporation which will have new owners?
Yes - the LLC may be legal owner of assets. however to take the ownership - assets should be either contributed by members of the LLC or the LLC purchases assets from previous owners. Instead of purchasing assets may be leased - but based on lease terms - that will be either rent or purchase.
How is the ownership of the corporation transferred to the new owners?
There are several ways to transfer assets of the corporation - the simplest is to sell assets. If owners are shareholders - assets may be distributed. If the corporation is dissolved - all assets have to be distributed. If the corporation is a member of the LLC - assets may be contributed to the LLC.
How does the LLC obtain ownership of the assets?

As I mentioned above - assets should be either contributed by members of the LLC or the LLC purchases assets from previous owners.

Let me know if you need any help.

Customer: replied 2 years ago.
Which method is has more tax advantages for the seller?
Expert:  Lev replied 2 years ago.

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