Discussion:S-corp wants to transfer assets to LLC and end the S-Corp
From TaxAlmanac
Discussion Forum Index --> Advanced Tax Questions --> S-corp wants to transfer assets to LLC and end the S-Corp
Discussion Forum Index --> Tax Questions --> S-corp wants to transfer assets to LLC and end the S-Corp
| 8 January 2008 | |
| S-corp assets: Cash, inventory, adjusted basis of fixed assets = $14,500. Stock Basis = Zero; Loans from shareholder = $76,000 Loans from others $18,500 Stock issued $1,000 Retained earnings ($81,000).
Client (husband and wife shareholders) wants to admit an outside partner and would like to form LLC for more flexible compensation terms compared to S-Corp. 1. Can assets of S-corp be transferred without taxation to LLC (taxed as partnership)? 2. What happens if the shareholders keep all debt outside of LLC and pay back personally? We have some suspended losses for the S-corp since basis is zero. 3. How do shareholders claim their suspended losses as the loans get paid off over future years, but S-Corp will be closed? 4. I'm assuming it is a bad idea to transfer loans into LLC if loans are greater than adjusted basis of assets transferred into the LLC, since that would trigger a taxable event to the shareholders, correct? Thanks. | |
