Discussion:Partners
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Discussion Forum Index --> Advanced Tax Questions --> Partners
Discussion Forum Index --> Tax Questions --> Partners
Tfortaxes@msn.com (talk|edits) said: | 14 October 2009 |
| Have 2 partners that are changing from 1065 to 1120S when the calander says 1/1/2010. 100,000.00 for one machine depreciated in 2009. Do I distribute that machine value as a form of payment to the partners to clear the books? Can I carry it right into the new Corporation? I have tried searching the forum and did not find anything like this. My head keeps telling me to distribute the machine then lease or sell it to the new corp? Frankly, I am stumped! Thanks for any imput you have. Tom...T for Taxes..... | |
| 15 October 2009 | |
| Tom,
Try searching "351 statement" and doing some serious research on incorporation issues. It appears there may be a myriad of issues of which you may not be aware. | |
| 15 October 2009 | |
| Tom, what kind of entity is this to begin with? Is it a partnership or an LLC taxed as a partnership? If it is an LLC, you can simply make a corporation/S election (see Form 2553) for it and chug right along. | |
| 15 October 2009 | |
| An LLC can elect to be a Sub S but see the next paragraph. Oh and partners have to adapt to taking wage payments with payroll reporting.
You must make entries to liquidate the prior partnership; book value of distributed assets are a distribution to the partners. No sale at FMV goes on the books like a corp has to do. Be careful if debts exceed basis of assets. Ending partner basis can't go negative without recognizing gain. Conversion to a corp can cost the guys $. Converted to corp books will have: Assets at book value (no accumulated depreciation - resets to zero) Stock and/or APIC | |
| October 15, 2009 | |
| It doesn't matter what kind of entity it is under state law. Whether it's a partnership, an LLC or something else, it can file Form 2553 with the same effects as if the partnership had contributed its assets to a new corporation and then liquidated. That may be partially or completely taxable. | |
| 15 October 2009 | |
| You are right LH2004. I struck my comment from the record and amended it! | |
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