My client will be the buyer and the BANK is the seller of real estate. The former owner had very specific use for the building and the a lot of equipment, specific use, was left in the building. The purchase will take place with one closing for 2.5 million building and equipment will be transfered for $1 on an SBA mortgage. My client has set up 2 LLCs one to hold the real estate and one for the operations with the equipment.
The bank in step two has agreed to loan the new operating enity $200,000 in cash, working capital, and take the equipment as collateral. The reason is they had an appraisal done that showed the value at $400,000, equipment, and they would loan cash for 50% of the appraised value. If the equipment had to be sold its value would be around $200,000. My problem is the $2.5 million would be on closing papers. The SBA is accepting the mortgage against the property only. I of course would love to assign $200,000 to equipment to be owned by the operating enity. To do that I think I would have to show a distribution to the partners, Real Estate Enity, of $200,000, equipment, (50% each) have them contribute it to the operating entity, equipment (50% each). Of course that leaves the Real Estate enity with a cost basis of 2.3 million-does SBA care? Does IRS care?
Can I do this? or how could I do this. My client would be in a like business so the building and the equipment works for them. The bank is anxious to sell this. I think that is why they are willing to do the $200,000 to the operating enity.
The bank in step two has agreed to loan the new operating enity $200,000 in cash, working capital, and take the equipment as collateral. The reason is they had an appraisal done that showed the value at $400,000, equipment, and they would loan cash for 50% of the appraised value. If the equipment had to be sold its value would be around $200,000. My problem is the $2.5 million would be on closing papers. The SBA is accepting the mortgage against the property only. I of course would love to assign $200,000 to equipment to be owned by the operating enity. To do that I think I would have to show a distribution to the partners, Real Estate Enity, of $200,000, equipment, (50% each) have them contribute it to the operating entity, equipment (50% each). Of course that leaves the Real Estate enity with a cost basis of 2.3 million-does SBA care? Does IRS care?
Can I do this? or how could I do this. My client would be in a like business so the building and the equipment works for them. The bank is anxious to sell this. I think that is why they are willing to do the $200,000 to the operating enity.
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