C Corp.-Sale of Bldg.

[Bird Legs]

Client owns the stock in a C Corp. that is a restaurant. He personally owned the land & building that the restaurant is in. The C Corp. pays client monthly rent.
In January 2006 Client sells the bldg. & land. Also included in the sale was the equiipment.
Stoves, refrigerators, freezers, etc. which were purchased in the name of the corp.
Bldg. & land sold for $395,000. on Jan 16, 2006.
Cost was 165,000. in 1998 when purchased.
Equipment had a value of 2700. when bldg. sold.
How would this sale be handled when the land & bldg. are owned by the individual
and all equip. owned by the C Corp.? The cash proceeds from the sale went to the
client, individually.

[veritas]

There are other scenarios but

unless you do something else the corporation has a sale of $2700 and a $2700 dividend distribution to the shareholder.

[Bird Legs]

Veritas

Thank you very much for your response.
Another question. Would the equipment be reported as dividendeds, be at market value or book value?
Of course, the settlement statement does not say anything about equipment. Just the selling price for the bldg. & land. So if a dividend is declared equallin the value of the equip. then this would be added to basis of the bldg.?

[Harvey Lucas]

Trust fund approach

It sounds to me like the individual collected $2700 of the Corporations proceeds from the overall sale.

Possibly the individual could simply turn over the $2700 to the corporation and the corporation would report the $2700 sale proceeds and the profit/loss on the sale.

Harvey Lucas

[Bird Legs]

Thank you Matt

No, the only thing sold was the bldg. & land as described in the closing statement.
This was my line of thinking, after I started thinking several days after posting.