Depreciation for Property of Single-member LLC Ownership Transfered to Spouse

[TaxNC]

Thank you to everyone for the replies.

[TaxGuyBill]

I agree with Robert's comment that you need to back up and look at WHY this is happening. Was he previously doing all of the work and now she is suddenly doing all of the work? If not, as Robert suggested, I suspect it they may be trying some questionable or fraudulent scheme to hide his income.

[New York Enrolled Agent]

Not 100% certain but transfers between spouses are generally not recognized for tax purposes under section 1041. Based on the post, it seems like H is transferring the business assets to W. The transfer is treated as if a gift - does the existence of an LLC have any impact? Unknown to me?

[Rapid Robert]

According to TheTaxBook, for a sole proprietorship, "Transfer of ownership consists of selling the business assets." I assume the LLC is a disregard entity for federal purposes, so taxed as a sole proprietorship.

Can't say I know the details, but it doesn't seem like he can just wave a wand and declare that there is a new owner. It seems to me like he is ending his business, and she is starting a new businesses, with newly acquired assets with a given basis. Or, is this some scheme to allow her to accumulate Soc. Security earnings even while he remains the primary operator of the business?

Here is the first article I found on the situation, maybe it will help. Also you don't mention if this is a community property state, where Qualified Joint Venture may or may not apply (just tossing this out for further consideration, I'm not up on all the nuances but TTB is a good place to start).

https://www.forbes.com/advisor/busin...llc-ownership/

[TaxNC]

A couple has always filed jointly with one spouse owning a business with depreciated property under his EIN. He is now changing the business's ownership to his spouse under her newly obtained EIN.
It is exactly the same business and name. Is it proper to simply continue depreciating the same property (with original placed in service date, adjusted basis, etc.) on the spouse's Schedule C/Form 4562?