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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 578
Experience:  10 years experience
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I have a Corporation that I am doing a 1031 exchange of some

Customer Question

Hey Pearl I have a Corporation that I am doing a 1031 exchange of some assets and two of the assets are registered in my personal name but were purchased with Corporate funds and depreciated on the corporate books. I am trying to find out how to word the transfer so that it isn't seen as a taxable exchange and disclose that I am just an agent of the corporation.
JA: The accountant will know how to help. Is there anything else important you think the accountant should know?
Customer: Nothing I can thing of
Submitted: 3 months ago.
Category: Tax
Expert:  Lane replied 3 months ago.

Hi. My name's Lane. ... I can help here

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I have a Law degree with concentration in Tax, Estate, & Corporate Law, … an MBA, with specialization in finance … a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986.

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Is this an S-Corp or a C-Corp?

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If it's an S-Corp then you are just distributing the asset (originally contributed) back out to yourself as a taxable exchange. The only way it would be taxable is if you didn't have enough basis in the S-Corp.

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In that scenario, you simply re-title. There's no taxable event.

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If this is a C-Corp, however,m becasue of the double taxation of C-Corps, things are not nearly that simple.

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Let me know and we can go from there

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Lane

Customer: replied 3 months ago.
It is a S Corp. I have been working with a 1031 exchange agent and they wanted me to update the sales agreement because the 1031 exchange is between the Corporation and the boats I have on the books are in my name. He didn't feel good about the Certified Sales Agreement without it stating something to the effect of me operating as an agent of the corporation and explaining the name difference.
Expert:  Lane replied 3 months ago.

Ok, what you really need to do is get whatever assets are being exchanged, INTO the name of the entity doing the exchange. I'm not so sure that someone acting as an agent will do it.

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Just to lay the foundation here; The ownership of the assets given up in exchange needs to be the same as the ownership of the replacement property.

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If that IS the case and you are just doing this as an agent of the corporation - where the corporation is giving up ('selling") assets to receive in exchange ('buying") assets then the agreement needs to be done with the CORPORATION being the seller and buyer (exchanger) and you simply sign AS an agent, with your name nowhere else on the agreement.

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If the boats are TITLED in your name, then you need formally to CONTRIBUTE the boats TO the corporation so that the above can be done.

Customer: replied 3 months ago.
Is there a way to formally contribute these boats to facilitate the sale to happen in December? You are correct it is the Corporation selling and exchanging these boats into another boat for the Corporation. It really has know personal involvement at all.
Customer: replied 3 months ago.
When we were drawing up the agreement we noticed the boats had my name on them and it was just a mistake when I went and registered them. I guess since I bought them outright without a loan for the Corporation with Corporate funds I messed up giving them my name instead of the Corporation.
Expert:  Lane replied 3 months ago.

Yep. this happens a lot. What needs to happen is the boats need to be re-titled. The process varies from state to state.

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For example in Florida, you notify your local tax collector or license plate agency in writing stating the problem and provide the vessel’s Florida registration number. They will then re-title the assets for a fee. And from an accounting perspective this is just a contribution by you TO the S-Corp of property (although it sounds like you've been treating them that way all along by depreciating.