transfer of assets from an s corp and a c corp

[wzs]

I have 2 corporations one an s-corp, one a c-corp, both owned by the same shareholders , same percentage.

due to building code regulations for air rights, it is to the advantage of the shareholders to take a building out of each entity and combine these two buildings under a 3rd entity, I am trying to structure the deal to be non taxable to my clients


- the way I read the law we need to create a new Qsub, then create a plan of reorganization on the old corp( maybe both?), so that, the old s and the c that will convert to become an s, can transfer under a 351 transfer tax free.
however the 5 year rule for BIG taxes would hit the c that was converted to an s, however my clients have no intention on selling any building for the next 5 years.

HELP, any ideas

Thank you all in advance

wzs

[Snaggletooth]

More Questions

Why is real estate being held in a corporation to begin with? The next "entity" should be personal ownership.

Just based on my experience, no one ever intends to sell any BIG property before the period ends. They think they're going to keep it "forever." Very seldom turns out that way.

[BHoffman]

You might like to take a look at forming a partnership or MMLLC, with the SCorp and the CCorp as partners/members. Information regarding tax free transfers of property can be found in IRC 721.