Discussion:BUYING SHARES NOT ASSETS
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| 14 April 2006 | |
| I have a client called X who is intersting in buying a property (Gas Station-bldg & land) for $460,000.
I intend to do it as follows: Organize an LLC (or a Corporation) in a third party name such as Sam. Let us call it ABC. ABC purchases the shares of Active Enterprises (The entity that currently owns the Real Estate which is a c-corp) for $460,000. Merge Active Enterprises and ABC. Organize another LLC in client x name. Let us call it XYZ. ABC sells the Real Estate to XYZ for $460,000. Dissolve ABC. If the current basis of Active Enterprises is $60,000, then Sam (or ABC) will have a capital gain of $400,000 on the sale of the Real Estate and a loss of the same amount on the dissolution of ABC. How will this be treated by the IRS. Thanks Tayseer | |
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