Ok, as you probably know, C-Corps don't have a separate capital gains tax rate
... it's all considered income at corporate rates,.... which range from 15% to 35%.
However, considering the economy, the recent decline in real estate values and the detrimental tax rate for real estate sales
inside a C corporation, now could be the time to act to limit the gain inside the C corporation.
(I'm guessing this is what you're thinking)
Basically, there are two primary ways to get the real estate out of a C corporation and still maintain control of the real estate:
1. Distribute the real estate out as a dividend
2. Sell the real estate to a related entity or individuals
Here's a thought:
If the corporation is eligible to make an S corporation election, the gain at the time of the election is tracked as net unrealized built in gain (typically called NUBIG).
THen if the S-Corp sells the asset
within 10 years, the corporation pays a C corporation tax on this NUBIG. After the 10 year period passes, the asset can be sold and the shareholders will be entitled to the long term capital
gains rate on gains in excess of the depreciation
By the way, this holding period was shortened for dispositions that happened 2009 through 2011, and (with the way our tax law
is constantly changing) it's possible it'll be shortened again by Congress.
Now, if the sale is required before the end of the statutory holding period, only the NUBIG is subject to corporate tax
... and the depressed real estate values we see today enhance the benefits
of an S corporation election now.
Short of that (please don't shoot the messenger here) ... the primary things are (1) to add any improvements that were made to the basis of the property, (2) Selling at a discount for some other less quantifiable value to try and mitigate the amount of gain.
One last point ... I you do look at doing the S-Corp election, and you are looking for another property, you may want to consider a 1031 exchange as part of that strategy.
Here's a good piece on that "tandem strategy." (The piece talks about -as it was written in 2010_ the 5 years holding period, but everything else still applies)www.1031-connection.com/siteAssets/.../IRS_Ruling_Has_C_Corp.pdf
Hope this helps
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