Discussion:S corp distrib of apprec prop.
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Discussion Forum Index --> Tax Questions --> S corp distrib of apprec prop.
| 15 February 2006 | |
| Summary of facts:
S Corp owns rental property purchased in 2003 Shareholders want to refinance, but cannot get done in corp name Property is deeded to S/Hs in 2005 and refinanced by them personally FMV = $165,000 Adj basis = $140,000 Mtg assumed by shareholders = $130,000 I think this is correct: 1. Per Sec. 311(b), the S corp has to recognize $25,000 gain on the distribution, which is allocated between the land and the house. 2. The shareholders have a distribution of $35,000, the difference between the FMV and the mortgage assumed. Their basis in the property is $165,000. Am I missing anything? | |
| 16 February 2006 | |
| could someone please, please respond to this or lead me to a resource that I can understand. thank you.LJACPA 07:45, 16 February 2006 (CST) | |
| 16 February 2006 | |
| hi you are ok havent confirmed but sale is recognized and distribution comes out at fmv net of debt assumed. assumed no prior c corp for BIG tax problems bye | |
| 16 February 2006 | |
| hi IRC 1239 applies the gain recognized by corp should be all ordinary bye | |
| 16 February 2006 | |
| Thank you, thank you for your response. I read Sec 1239 and would have never thought to if you had not mentioned it. So, I guess this means that what I'm now showing as Unrecaptured Sec 1250 gain (for the depreciation) and Sec 1231 gain is incorrect. Since the rental house is depreciable in the hands of the recipient(s), the entire gain is ordinary. Yikes! Leading to another question, since I'm segregating the land and building (which I believe is correct) and the land is, of course, not depreciable, is the gain on it still Section 1231? | |
| 16 February 2006 | |
| hi yes a reasonable allocation would be alright to get 1231 bye | |
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