Question about LLC transfer of money

[rfk]

What is the board's opinion about a member managed, family, where the father and daughter are contemplating moving money out of real estate LLC to father who wants to put the money in another investment.

His basis is $50,000 and the gain is $45,000, totaling $95,000 of monies considered. There would not be a physical sale of the property but just movement of money from the LLC to the father. What is the best way to handle this tax wise? I am sort of at a loss for any preliminary idea as of now. Am wondering about gifting, exchanging, or what other possible situation so that the property will stay in the real estate LLC. I just cannot think of anything at this juncture.

Thanks.

rfk

[BOB W]

What is the board's opinion about a member managed, family, where the father and daughter are contemplating moving money out of real estate LLC to father who wants to put the money in another investment.

His basis is $50,000 and the gain is $45,000, totaling $95,000 of monies considered. There would not be a physical sale of the property but just movement of money from the LLC to the father. What is the best way to handle this tax wise? I am sort of at a loss for any preliminary idea as of now. Am wondering about gifting, exchanging, or what other possible situation so that the property will stay in the real estate LLC. I just cannot think of anything at this juncture.

Thanks.

rfk

Not to be pesty, but what type of LLC? Partnership , SCorp or CCorp?????

[ChEAr$]

Not to be pesty, but what type of LLC? Partnership , SCorp or CCorp?????

So I was thinking about the default treatment being 1065, thus any member's capital account might wind up in the negative. No problem.

but.. if a corporation, Bob is implying that those rules would govern the treatment of the
extra payment to a member. Hmmmm....

[Gretel]

If indeed 1065 and distribution are not equal you have to deal with special allocations. In a nutshell this means to keep a separate set of books at FMV.

[rfk]

It is a 1065, LLC situation

This is a partnership, so I would presume a distribution of money out of capital account. But I am not privy to the nuances of the capital account. So I am going to generalize when I answer the person's question about whether taxable or not based on generic circumstances. Unless some one on the board has any other ideas about the original posting.


rfk

[Burke]

What is the board's opinion about a member managed, family, where the father and daughter are contemplating moving money out of real estate LLC to father who wants to put the money in another investment.

There would not be a physical sale of the property but just movement of money from the LLC to the father. Thanks.rfk

If the property is not being sold, then where is the cash coming from? Is it income-producing property? They would have paid taxes on this income in past years. There should be no problem just distributing unneeded cash to members/partners, IMO.