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Discussion Forum Index --> Tax Questions --> Using S-Corp assets to start an LLC
Mmcpas (talk|edits) said:
| June 29, 2007
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| I have a single stockholder S-Corp that is closing to go into business in a three member LLC. She has retail inventory, some FF&E (not quite fully depreciated) and a loan from the stockholder left in the S-Corp. She is transfering her inventory and FFE into the LLC as her buyin. She is personally cash poor due to the loan to the S-Corp. The S-Corp has very little cash that it will use to pay down the loan and the balance of the loan will forgotten by the stockholder when she closes her S-Corp. How do I treat the inventory and FFE coming out of the S-Corp to her on the final tax return?
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JR1 (talk|edits) said:
| June 29, 2007
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| She'll be cash poorer after this. There is no such thing as a transfer as you put it. It's a sale of the assets at FMV and recognition of gain at the corp level, which flows thru to her 1040. Then, the assets can go into the LLC at FMV/since basis is FMV...Good luck. And sorry.
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Riley2 (talk|edits) said:
| 1 July 2007
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| The transfer of the assets from the S corporation to the LLC in exchange for an LLC interest would be tax free under Sec. 721. However, if the S corporation is liquidated after the transfer, there would be a liquidation gain or loss.
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