C Corp forming LLC for real estate

[ksfcpa]

I have a C Corporation (only one owner in the C) that wants to form a LLC for the purchase of land. The C corp will then build a building on this land. The C corp will be the only member of the LLC.

The only pro I can see is limited liability. But would this really protect the C corp?

Should the LLC use the same accounting message as the C corp?

What are the pro and cons and is it really worth setting up a LLC for only the land?

I can't find any good reason to put the building in the LLC. Do you agree?

The owner of the C corp would like to eventually own the land personally. Any thought on the best way to handle this transaction or any of the above questions.

Thanks
Karen

[Roland Slugg]

Don't do it

Dear Karen

Welcome to this board.

In my opinion it is a very bad idea for a C Corp to own real estate ... either land or buildings ... and whether directly or indirectly via an LLC. The vast majority of lawyers and CPAs would probably agree with this.

If the shareholder wants to eventually own the land himself, he should buy it at the beginning. Same for the improvements ... i.e. the building.

As for liability, get an insurance policy. Although some will disagree with me, I believe the benefits of an LLC are way, WAY overrated and exaggerated.

[JoshinNC]

Agree with Roland

The sole shareholder of the C corp should also be the single member of the LLC owning the land and building. The LLC will then rent back to the C corp at cost, minus allowed depreciation.

Also agree that liability insurance should be purchased to protect the SM.