sole proprietor to llc

[Super Mom]

I have a client who wants to have an LLC for his house flipping but has not done so yet. He has several business expenses for 2015 and has already bought a house. Advised him to show all that on a sole proprietorship this year. I'm assuming in 2016 when he set's up the LLC, the assets could just be transferred in an IRC 351 transfer, I know that is available for corps assuming same for LLC?? I don't want to advise him wrong and cost him more money.

[Super Mom]

any advice????

[BHoffman]

I have a client who wants to have an LLC for his house flipping but has not done so yet. He has several business expenses for 2015 and has already bought a house. Advised him to show all that on a sole proprietorship this year. I'm assuming in 2016 when he set's up the LLC, the assets could just be transferred in an IRC 351 transfer, I know that is available for corps assuming same for LLC?? I don't want to advise him wrong and cost him more money.

If your client forms a "single member" LLC then he will still report on Sch C unless he makes an election to be taxed as a corporation.

[AZ-Tax]

Seek legal advice

I have a client who wants to have an LLC for his house flipping but has not done so yet. He has several business expenses for 2015 and has already bought a house. Advised him to show all that on a sole proprietorship this year. I'm assuming in 2016 when he set's up the LLC, the assets could just be transferred in an IRC 351 transfer, I know that is available for corps assuming same for LLC?? I don't want to advise him wrong and cost him more money.

I have an attorney client who has rentals and each rental has its own LLC as he had told me. I would encourage him or her to seek legal advice on the LLC formation and any property transfer. Your advice for 2015 sounds correct.

[ATSMAN]

I have an attorney client who has rentals and each rental has its own LLC as he had told me. I would encourage him or her to seek legal advice on the LLC formation and any property transfer. Your advice for 2015 sounds correct.

I am not an attorney but I think the reason some people have each property in its own LLC is to isolate liability from each other under state law. From a federal tax perspective it does not make any difference other than more work if all of them are SMLLC.

[Super Mom]

If your client forms a "single member" LLC then he will still report on Sch C unless he makes an election to be taxed as a corporation.

I think he has a partner

[BHoffman]

"Multi-member" LLCs report as a partnership on form 1065.

[Super Mom]

"Multi-member" LLCs report as a partnership on form 1065.

Yes I know. In a corporation, they can have a one time transfer of assets for 80% or more stock control of the company. Is it the same for an LLC? They don't have "stock" per say but they do have percentages of control.

[BHoffman]

Yes I know. In a corporation, they can have a one time transfer of assets for 80% or more stock control of the company. Is it the same for an LLC? They don't have "stock" per say but they do have percentages of control.

Pub 541 and/or The Tax Book's Partnerships chapter can tell you how to treat property contributions into a partnership.

[Super Mom]

I FINALLY saw it in TTB 27-2 and 27-3---transfers to partnerships for a partnership interest is also not taxable, just must be depreciated using the same method, basis, etc...