Discussion:Business renting facility owned by related LLC
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Revision as of 15:31, 29 October 2009
Discussion Forum Index --> Advanced Tax Questions --> Business renting facility owned by related LLC
Discussion Forum Index --> Tax Questions --> Business renting facility owned by related LLC
DR BRISKET (talk|edits) said: | 29 October 2009 |
| I have a business client (C-corp with 2 shareholders) which leases its premises from an LLC which is owned by the same two shareholders. I think this is a fairly common practice. The LLC was formed when the building was purchased. Of course, the LLC uses the lease income to service the building mortgage.
The question has been asked if this building could be transferred to the C-corp without creating a taxable event. The shareholders, along with an outside consultant, feel this would strengthen the C-Corp balance sheet, although I am not convinced this would be the case. It would seem to me the building would actually have to be sold to the C-Corp at current market value which would create both capital gain and ordinary income (for the depreciation recapture)to the LLC, and ultamately the LLC members. Any imput from the Tax Forum members would be greatly appreciated. Thank you. | |
