Discussion:PLR 8350084 - Selling home to your own S corp

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Discussion Forum Index --> Basic Tax Questions --> PLR 8350084 - Selling home to your own S corp
Discussion Forum Index --> Tax Questions --> PLR 8350084 - Selling home to your own S corp

Pjoo (talk|edits) said:

6 November 2009
I read a book, in which the author suggested that the sale of your home to your 100% owned S corporation should be a valid sale for purpose of the exclusionanry rule by avoiding capital gain $250,000/$500,000 (single/MFJ with the 2 out 5 years primary home usage test). The author continuned to cite PLR 8350084 to support his opinion.

Is this a good advice for me to share with my clients?

Thank you for any input.

Paul Joo, CPA in Garden Grove, CA

Death&Taxes (talk|edits) said:

6 November 2009
Here is the ruling: http://www.legalbitstream.com/scripts/isyswebext.dll?op=get&uri=/isysquery/irlab28/1/doc

It was issued before we had Section 121, but the sentence "Accordingly we conclude that section 1034 would govern the above sale of your home to Corporation provided that both the "old residence" and "new residence" qualify as your principal residences" would seem to give the same treatment under 121.

However, note "Section 1239 of the Code provides that in the case of a sale or exchange of property, directly or indirectly, between related persons, any gain recognized to the transferor shall be treated as ordinary income if such property is, in the hands of the transferee, of a character which is subject to the allowance for depreciation provided in section 167."

Oddly two to three years ago we had a lengthy discussion regarding selling the residence to the owner's LLC. Opinion was divided, and I took a negative stance, but I recall we felt a S Corp would work. I don't recall anyone bringing up this PLR.

Death&Taxes (talk|edits) said:

6 November 2009
Discussion: Principal place of residence exclusion
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