Situation: Client purchased land in S Corporation name in 2005. He paid all expenses for land such as interest and other costs so that he can construct building on it. Construction lasted until Dec 2006. He moved into the building on Dec 15th, 2006
In 2005, balance sheet, Land was valued at $780,000. No building yet (as it was under construction). Also, on 2005 balance sheet, there were construction expenses for 2005 of $40,000 which were capitalized.
In 2006, January, Client formed LLC. Client transferred property into LLC. Then paid all expenses through LLC for further construction of building. Building completed on Dec 15th, 2006.
Questions:
(1) From tax point of view, how do you take Land out of S Corporation and put on LLC
(a) Can I just show as sale of land and report gain or loss?
(b) Will the FMV value of land (same as cost) have any impact?
(c) Should I leave everything under Scorp?
(2) Cost of land has not appreciated by much
(3) Building was never under Scorp. It was under LLC since it was completed in Dec06
Can I leave Land under scrop and Building under LLC?
Please let me know if you need more info.
Thank you in advance
In 2005, balance sheet, Land was valued at $780,000. No building yet (as it was under construction). Also, on 2005 balance sheet, there were construction expenses for 2005 of $40,000 which were capitalized.
In 2006, January, Client formed LLC. Client transferred property into LLC. Then paid all expenses through LLC for further construction of building. Building completed on Dec 15th, 2006.
Questions:
(1) From tax point of view, how do you take Land out of S Corporation and put on LLC
(a) Can I just show as sale of land and report gain or loss?
(b) Will the FMV value of land (same as cost) have any impact?
(c) Should I leave everything under Scorp?
(2) Cost of land has not appreciated by much
(3) Building was never under Scorp. It was under LLC since it was completed in Dec06
Can I leave Land under scrop and Building under LLC?
Please let me know if you need more info.
Thank you in advance