Transfer of Property From LLC

[Taxman]

I have a client who is a Florida LLC consisting of 2 partners which files the federal income tax return as a partnership. The LLC currently owns land in North Carolina and the 2 partners want to tranfer the land out of the LLC into their own names so they don't have to pay business taxes and fees to North Carolina. By transferring the land into their own names would they need to form a new partnership filing the tax return under their own social security numbers or a new EIN number for the partnership or could they keep filing under the original parntership for tax purposes? Any help would be appreciated

[JoshinNC]

the transfer of the property is a distribution

I have a client who is a Florida LLC consisting of 2 partners which files the federal income tax return as a partnership. The LLC currently owns land in North Carolina and the 2 partners want to tranfer the land out of the LLC into their own names so they don't have to pay business taxes and fees to North Carolina. By transferring the land into their own names would they need to form a new partnership filing the tax return under their own social security numbers or a new EIN number for the partnership or could they keep filing under the original parntership for tax purposes? Any help would be appreciated

with no tax liability until the individuals sell the property (assuming they have not elected corp status). Why would they need to continue to file a return for the property? If it's not being used as rental property or for business purposes they just continue to file the LLC return for it's activities and the NC property is held jointly between them individually.

[Taxman]

They plan to selll the land in a few years. They just want to avoid North Carolina from charging them a ton of fees by being in LLC in North Carolina. They have to incurr expenses regarding the maintance of the land and want to keep everyhting together. Thats why I think if they transfer the property to themselves and basically form a new parntership that partnership can then deduct business related expenses. Would they still be able to defer the tax liability until the new partnership sold the property?

[JoshinNC]

Not sure, would have to do some research (which I would tell you to charge them for)

They plan to selll the land in a few years. They just want to avoid North Carolina from charging them a ton of fees by being in LLC in North Carolina. They have to incurr expenses regarding the maintance of the land and want to keep everyhting together. Thats why I think if they transfer the property to themselves and basically form a new parntership that partnership can then deduct business related expenses. Would they still be able to defer the tax liability until the new partnership sold the property?

If they form a new partnership to hold the property, and it's in NC they won't avoid any NC fees because the new partnership will be liable for them. Or am I missing something?

[Taxman]

If they formed a new partnership it would be in Florida and mainly for federal income tax reporting. I assume since the title of the property would be transferred to each partner in their own name they would not be seen as a business entity by North Carolina and thus not have to pay North Carolina's business fees. The partners are mostly concerned about the federal tax consequences. I assume if they transfer the land to a new partnership, they would not have to recognize gain/loss until the proprty is sold. Thanks again JoshinNC for your input.