Discussion:C Corp sale of building - discounts
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Discussion Forum Index --> Basic Tax Questions --> C Corp sale of building - discounts
Discussion Forum Index --> Tax Questions --> C Corp sale of building - discounts
| 30 October 2009 | |
| I have a client that has real estate in a C Corp. He is selling this real estate to an LLC owned by the shareholders of the C Corp. They had an appraisal done on the building and it came in at $590,000. I want take some discounts to lower the tax bite on the sale of the building. I was thinking taking a 6% discount as commercial property around here sales for about 90% of asking price and then take another 10% as they will not be using an agent which normally charge a 10% commission on commercial property.
Any thoughts or insight would be appreciated. | |
| 31 October 2009 | |
| Jeffclk: Without a lot of detail, don't know if the following is of help, but you might want to look at the built-in capital gain tax, marketability, etc., in trying to develop a discount--while the cases I've read really relate to Estate tax valuation, the principle should hold true ..I would seriously look at a complete liquidation of the "C" scenario to forecast results. It's been some time, but from memory, one case was the Jelke(?) estate, and another, Estate of Davis--May be of help. | |
| 1 November 2009 | |
| The standard of value for the real estate appraisal is most likely "Market Value" which is the price at which the property would change hands between buyer and seller. This should already represent the selling price, not the asking price, so I think your first discount of 6% is inappropriate (unless you want to argue that the appraisal is dated or incorrect, but then you are really just substituting your own judgment instead of getting an up to date and accurate appraisal). I do think it would be reasonable to assume that the seller would take less given the seller doesn't have to pay an agent. | |
| 1 November 2009 | |
| Dale is selling a walnut praline factory to Chip.
Chip: "Can we take 6% off?" Dale: "Certainly. In fact I insist that you take of another 10%." Chip: "You are so kind. Maybe I'll take another discount of 7.5% to pay the sales tax." Dale: "Please do. And while your at it, how about another $6,000 for attorney fees." Chip: "It's so nice doing business with us!"
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| 1 November 2009 | |
| "So, why is everybody so lovey-dovey? "...Chip is Dale.
"I have a client that has real estate in a C Corp. He is selling this real estate to an LLC owned by the shareholders of the C Corp" The way I read this he is selling to himself. | |
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