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Discussion:1st time from S corp to 1065

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Discussion Forum Index --> Tax Questions --> 1st time from S corp to 1065


Pjnieves (talk|edits) said:

10 May 2007
No formal reorganization that I can see. Business has not changed. Any issues I should be aware of such as check the box, final 1120S and initial return issues. Conversion/liquidation gain issues.

I just need to get the return done. Any issues with Lacerte I should know about.

Any help is welcomed.

Peter

Kevinh5 (talk|edits) said:

10 May 2007
1) did they get a new EIN for the partnership?

2) Considered a liquidation of the corp (assets out at FMV - compare with each shareholder's basis to calculate taxable gain), then a contribution of capital to the partnership.

3) Did they get any advice on doing this or are you just trying to fix what they alrady broke?

WillyB (talk|edits) said:

10 May 2007
Lacerte will not be the problem. Problem is that you cannot go S corp to Partnership

tax free. As Kevin notes.... this would be treated as liquidation and then formation of partnership.

Good luck

JR1 (talk|edits) said:

May 10, 2007
Ahhh, PJ, you could be in very deep weeds, prop broken, and rushing towards a dam. There is no reorg of a corp to a partnership. It's called a sale of the assets at fmv and a liquidation of the corp, and then reorging under 721. So yeah, there are some issues you should be aware of.

Riley2 (talk|edits) said:

10 May 2007
Consider having the S corporation contribute all of its assets to a partnership. The transaction would be tax-free under Sec. 721.

Pjnieves (talk|edits) said:

10 May 2007
Riley2,

I need to do more research, but according to JR1 a sale is unavoidable. I'm not sure that's true when all the assets were transferred to the LLC accroding to Sec. 721. No new EIN was created. I'm just trying to help a colleague's client with this one. It's a done deal that took place during mid 2006.

Any more feedback would be great from anyone. Thanks

pj

WillyB (talk|edits) said:

11 May 2007
I think what Riley is referring to is .. the S corporation can be a partner in a partnership.. so

if you S Corp and another partner transfer assets.. that could be tax free under Sec. 721

Riley2 (talk|edits) said:

11 May 2007
Willy B is correct. Sec. 721 overrides Sections 331 and 336.

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