Discussion:LLC will elect S-corp; but owns real estate
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Discussion Forum Index --> Tax Questions --> LLC will elect S-corp; but owns real estate
| 24 January 2008 | |
| I have a client (LLC) taxed as partnership. In the beginning I advised S-Corp election but they had "friends" who advised Partership and the friends won. Well now, after 2 years of paying SE tax (2 members, 50/50 capital contribution, but only One of the members actually works there, and is payed guarrenteed pymts for his services) the member who does not work there is tired of paying SE tax on money that is really just investment income in his situation. That's what I told him in the beginning, but now he sees the light.
So both members agree and we're going to make the S-election. However, they own a building (it's a very successful restaurant) in the name of the company. I know everyone says no real estate in a S-corp, so where do I go from here? How do I get it out of the company, is it treated like a sale to the members, we want to do the election for the year 2008, so I guess it's too late to put the "sale" in 07 as the title is still in the company name, or is it too late?? Any thoughts would be appreciated. | |
Death&Taxes (talk|edits) said: | 24 January 2008 |
| Set up a second LLC to run the restaurant as an S and leave the real estate where it is. | |
| 24 January 2008 | |
| why not leave the building in the 1065 LLC and create a separate S corp for the restaurant business itself? | |
| 24 January 2008 | |
| great minds use fewer words - you beat me to the punch DT | |
| 24 January 2008 | |
| Discussion:Voiding stale dated payroll checks, punch, cookies, Jim Jones, china, coffee, cat food and unclaimed property is the definitive thread on being beaten to the punch | |
Death&Taxes (talk|edits) said: | 24 January 2008 |
| At least we didn't call it a homework question! | |
| January 24, 2008 | |
| Or perhaps consider merely bifurcating the LLC interests instead. The passive guy should NOT be paying SE taxes on his income. DT knows how to do the link. Wait three minutes for it. If he's busy. | |
| January 24, 2008 | |
| Kevin, that 'beat me to the punch' thread from last year is too funny. I sorry I wasn't a TA'er back then, as humor in late March is very hard to come by. He**, humor in this profession can be hard to come by! | |
Death&Taxes (talk|edits) said: | 24 January 2008 |
| You can't possibly mean Discussion: LLC, SE Tax, and Bifurcation of Income, could you?
We could have called Kathy a 'donkey' but that reference is gone with the delete key, thanks to Natalie. Gone with it is the wonderful illustration Kevin gave us of the Jackson Hewitt office in Bangalore. | |
| 24 January 2008 | |
| actually, DZ posted the "tax donkey" picture, I had posted a youtube video of what tax donkeys do to people who post to TA without either a) searching first or b) belonging here in the first place. | |
Death&Taxes (talk|edits) said: | 24 January 2008 |
| My apologies! Z is closer to Bangalore than you are, Kevin....that is, if you go west. Not sure of the mileage is Kevin goes east.
If I did a few Schedule F's, I probably would have run across the You Tube deduction. | |
