Discussion:S-Corp assets to SMLLC conversion
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Discussion Forum Index --> Tax Questions --> S-Corp assets to SMLLC conversion
| 13 September 2007 | |
| I have a single stockholder S-Corp that closed to go into business as a disregarded single member LLC (in a different state). Owner wanted a simple transfer of assets to new entity, but obviously not possible.
Having trouble figuring out how to avoid double taxation of assets contributed to SMLLC -- inventory ($40k) and capital assets ($200k). At dissolution, s-corp inventory was passed to owner as ordinary income, and know-how created by s-corp passed to owner as capital gain (offset some 2002 carryover losses). I think I understand how to handle the LLC return of capital for partnerships, but am having a lot of trouble with SMLLC. 1) When SMLLC sells the inventory, how is that reported to allow a deduction against "basis" so the owner isn't taxed twice? 2) For the capital assets know-how, is there any way for the owner to take a deduction against smllc income for his contribution of the capital assets to the smllc? What's the easist way to dispose of know-how for owner to recover "basis" contribution on which tax has been paid? 2a) Lesser question: If capital asset know-how became worthless what's the proper way to deduct against smllc income? 2b) Lesser academic question: If capital asset know-how was sold by smllc, would owner be taxed on income from sale? code/reg/rr references welcome | |
| 13 September 2007 | |
| This is a mess Skookum. What exactly was he trying to accomplish? Why would moving the single S/H S-corp to a new state not work?
1. - Expensing the inventory asset against the sale will accomplish a basis recapture. Maybe I do not understand the question. 2. - ยง197 assets are amortized over 15 years, I am not for sure his 'know-how' 'asset' would qualify.
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