Discussion:Appreciated Real Estate in a C-Corp Nightmare
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Discussion Forum Index --> Advanced Tax Questions --> Appreciated Real Estate in a C-Corp Nightmare
Discussion Forum Index --> Tax Questions --> Appreciated Real Estate in a C-Corp Nightmare
| 26 August 2010 | |
| As discussed these situations are a nightmare. I have reviewed previous dicussions and reviewed PPC and IRS resources but not clear of answer. Have a new C Corp client who owns appreciated real estate and significant NOL carried forward from 2009. Sole shareholder would like to buy this appreciated property from the C Corp. OR take the appreciated propety as a dividend. I realize if its initially treated as a dividend, in actualality it's treated as a sale at FMV to the shareholder.
Question: If property is sold at FMV to shareholder, does shareholder then have to report dividend income? Of course the C Corp has already reported gain of sale of property on 1120 less NOL carried forward. This one is tough to wrap my head around for some reason. Thank you in advance for your opinion. | |
| 26 August 2010 | |
| Thank you, Kevin. Did you mean, 'a sale is treated as a dividend if there is not adequate consideration given'? Minor edits on question above | |
| 26 August 2010 | |
| you are correct, my post didn't make sense. I've edited it. | |
| 26 August 2010 | |
| a dividend in kind would have to be 'marked up' to FMV by the C corp (effectively the same as booking additional income as a sale). Debit Dividend/retained earnings capital accounts (@FMV), Credit Asset, Credit Income/Gain from Disposition of Asset | |
| 26 August 2010 | |
| Now this is making sense... These summer, out-of-season, days are making me a lazy thinker. Of course, one of these situations come up and wakes me up. | |
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