Discussion:Property transferred between same-sex spouses

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Discussion Forum Index --> Advanced Tax Questions --> Property transferred between same-sex spouses


Discussion Forum Index --> Tax Questions --> Property transferred between same-sex spouses

Joanmcq (talk|edits) said:

14 October 2008
Property rules follow state law but....I'm in CA and my clients are same-sex spouses who set up an LLC and purchased rental RE. The LLC is set up 50/50, but on partner contributed $123,000 and the other put in $12,000. Under CA rules, there is no tax consequences of property transfers between spouses, but for federal there would be gift tax issues. I'm filing a 1065, but do I have a gifting issue for federal purposes? Anyone in MA come across this yet?

Kevinh5 (talk|edits) said:

14 October 2008
I agree that for Fed purposes a gift tax return should be filed.

ReadMyLips (talk|edits) said:

15 October 2008
Could part of the contribution be considered a loan to the LLC or the other DP? May be able to equalize the equity over the years using debt forgiveness in the amount of the annual exclusion?

Joanmcq (talk|edits) said:

15 October 2008
So structure as loan on fed end, then forgive 12k per year...is that kosher? This is such a new area; why I'm wondering if anyone in MA has had this situation.

ReadMyLips (talk|edits) said:

15 October 2008
I'm in CA also. I think you would have to structure it based on the federal rules; it would have no impact for CA.

Michaelstar (talk|edits) said:

15 October 2008
Who's transfering property here??? It seems to me that we have an LLC that is being treated as a partnership and we have two members who have contributed different amounts of capital. I do not see any gifts going on nor do I see the need for loans between the members. What does the LLC agreement state on these issues?

ReadMyLips (talk|edits) said:

15 October 2008
If they are 50/50 owners then they should be contributing the same amount.

TDono2 (talk|edits) said:

15 October 2008
I may be wrong, but if the operating agreement states that they share in profits/losses 50/50, but allow for different capital contributions at the start of the company, then they just each have a different basis. If the OA allows for additional contributions by the partner with the lower basis, eventually, they would be equal.

However, I have been known to misinterpret on occasion. Here's a link to the CA Corp Regs. [1]

Joanmcq (talk|edits) said:

15 October 2008
Ah, I read that the same way. Thank you.

Riley2 (talk|edits) said:

17 October 2008
Under Federal law (see below), same-sex marriages are not recognized.

Title 1

§ 7. Definition of “marriage” and “spouse” How Current is This? In determining the meaning of any Act of Congress, or of any ruling, regulation, or interpretation of the various administrative bureaus and agencies of the United States, the word “marriage” means only a legal union between one man and one woman as husband and wife, and the word “spouse” refers only to a person of the opposite sex who is a husband or a wife.

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