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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10464
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I need to transfer real estate from one LLC to another LLC

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I need to transfer real estate from one LLC to another LLC that has not been established yet. The LLC that currently owns the assets is a single member one. How can these assets be transferred without tax issues? The 2nd LLC will be owned by the same member, with possibly another member so as not to be considered a disregarded entity. His allocation would be minimal. There is no money owed on the property

NPVAdvisor :

Hi

NPVAdvisor :

First, a Single member AND a multi-member LLC are both PASS-THROUGHs for tax purposes ... so is an S-corp and a grantor trust

NPVAdvisor :

Only C-Corps and Irrevocable trusts pay their OWN taxes and corporate and trust rates respectively

NPVAdvisor :

If you have more than one member in your llc (owner) then you'll do a partnership return (another pass-through, partnershps) but the profits and losses will still flow through to the owners (just through a K-1, rather than a schedule c)

NPVAdvisor :

for S-COrps, sole proprietorships, partnerships, REVOCABLE trust, they all flow through to the owner's 1040

NPVAdvisor :

SO, if you're tryng to move the property from one LLC that you own to another, you just need to have it retitled ... there's no taxable event

NPVAdvisor :

you own both

NPVAdvisor :

Now, if this new LLC has an additional member(owner) then you're either gifting the proportion of property that they own on the new LLC, or you could do the transactionn as a sale ... but the portion that is stayng yours will retain it's basis... nothting changes for you ... the TAXABLE event will come when you sell the property

NPVAdvisor :

here's no REAL, certainly no significant, difference (tax wise) between being a disregarded entity and doing a schedule C to then carry the profit or loss to line 12 of the 1040 thav there is from doing it as a multi=member llc ... (other than the incmone ,expenses, etc will flow through to that same line 12 on EACH owner's 1040, depending on how you've written your operating agreement and decided to apportion those things ... It just gets tp the 1040 via the K1 as opposed to the Schedule C

NPVAdvisor :

sorry for the typos .. botXXXXX XXXXXne .. unless you set things up in a truly separate taxable entity there will be very little difference tax or ownership wise

NPVAdvisor :

You might save some money on self employment taxes by using the S-corp elevtion so that not everything that comes to you is self-employment , thereby saving (depending on the amount of income) some self employment taxes.......Your salary can be w-2 (so the the s-corp pays 1/2 of the ss and medicare and you pay the other half as the employee....BUT then the rest of the profit is treated as a dividend (...no self employment taxes on that portion of the profits)

NPVAdvisor :

But just to keep things simple, and answer the initial question ... If you move the ass owned by your single member LLC to another LLC (for which you are the single member) ownership wise, nothing happens you still own it .. and because it's a passthrough, when you DO actually SELL the property you'll get that favorable capital gains treatment, because, again, it's a passthrough ... it all flows through to you.

NPVAdvisor :

Can you tell what your objective is?

NPVAdvisor :

being a disregarded entity doesn't really mean anything other than changing the paperwork AND (now this is really a state law, incorporation law issue) you are liable personally for business debts, lawsuits, and other liabilities ... but that is business entity issue, not a tax issue, and the LLC DOES provide that corporate type liability protection, (an LLC is really a hybrid between the partnership and the corporation ... it has the liability protection of a corporation, but the flexibility and ease of operation of a partnershipO

NPVAdvisor :

ahhh ... I see you're typing ... I'll wait

Customer:

I was starting to type. No I cannot tell you what the objective is. I guess the botXXXXX XXXXXne is that there is no tax issue until the property is sold correct?

NPVAdvisor :

That's right (sorry for the data dump ... just wanted to give you enough to kind of see how ALL of the pass through really have essentially the same effect, tax-wise)

NPVAdvisor :

LLC's are great ... (the fastest growing entity type out there)

Customer:

How can I print this chat? Just hit print on my computer?

NPVAdvisor :

OK . file-print ... Save this page as a favorite ... Copy and paste into a document like MS Word .. but this will ALL stay here for you to come back to once we're done

NPVAdvisor :

3 different ways to do it

NPVAdvisor :

If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better … That's the only way they will pay us here.


HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question.

NPVAdvisor :

OH . I just thought of a 4th way - Copy this and paste it somewhere, and you can always just paste it back into your browser: http://www.justanswer.com/tax/7wrsn-need-transfer-real-estate-one-llc-llc.html

Customer:

I am sorry, I did not get your credentials. Are you a tax attorney, CPA or what?

NPVAdvisor :

A am a CFP, have MBA in Finance, and hold a CRPS (Chartered Retirement Plans Specialist) license ... have been doing tax planning for business owners and individual clients since 1986

Customer:

OK thanks. You have answered my question.

NPVAdvisor :

i AM also a final term JD (lawschool) student (so that I can actually draft the paperwork for the trusts, 401(k) plans, etc) that I already design but must send out of how for the atty to print out the trust and charge $3000 for it

NPVAdvisor :

No problem .. feel free to come back if you want to drill down more on this

Customer:

Thanks

NPVAdvisor :

But, again, I WOULD appreciate a positive rating ... it's the only way they'll pay us here ... You're very welcome

Lane and other Tax Specialists are ready to help you

Hi George,

Just moved this th the Q&A mode ... might allow you to see it all better.

Lane