Husband & wife operate a LLC which is taxed on Sch. C as they live in a community property state (WI). They are getting a divorce. As part of the divorce settlement, the husband will own the business 100%.
1. Since there will be a 50% change in ownership, is there any tax event? (My understanding is the changing the ownership of the business will be effected this year, while the divorce will be final January 2008.) They will still be filing a MFJ return for 2007. Generally 50% changes terminates a partnership, but since this isn't being taxed as a partnership does it matter?
2. Husband is considering changing the name of the business or starting new LLC. Will this impact answer to #1?
3. Most of the fixed assets are fully depreciated by Sec. 179 in prior years. If husband renames the business or creates new business, how are the fixed assets handled? My thought is since fully depreciated, you can't depreciate again. And no gain or loss on termination of previous business.
Am I missing anything?
1. Since there will be a 50% change in ownership, is there any tax event? (My understanding is the changing the ownership of the business will be effected this year, while the divorce will be final January 2008.) They will still be filing a MFJ return for 2007. Generally 50% changes terminates a partnership, but since this isn't being taxed as a partnership does it matter?
2. Husband is considering changing the name of the business or starting new LLC. Will this impact answer to #1?
3. Most of the fixed assets are fully depreciated by Sec. 179 in prior years. If husband renames the business or creates new business, how are the fixed assets handled? My thought is since fully depreciated, you can't depreciate again. And no gain or loss on termination of previous business.
Am I missing anything?
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