Posted by John K Haslach, CPA, MST on October 04, 2004 at 06:11:36:
You have tax issues when the property comes out of the LLC and when it gets contributed back into the LLC. You should consult with someone who is very comfortable with Subchapter K of the IRC.
Accounting treatment of deed in-> out - Posted by Erick
Posted by Erick on September 29, 2004 at 17:59:30:
As many people have probably run across, lenders often want you to deed a property out of an LLC (a multi partner LLC in this case) to get financing. So, you deed it out to the person who is qualifying and signing for the loan and they even say that you can deed it back into the LLC after the financing is complete. Similar to a with a trust where they want you to take it out of the trust, do the financing, then put it back in.
My question is, if you do this, how should you go about the accounting treatment of it. I know that it is legally and technically a sale/purchase from the LLC to the individual and another sale/purchase back again so I’d like to recognize it as such as opposed to just ignoring it like it never happened.
But, we don’t want to cause a taxable event so initially I thought it’d be best to try to transfer the property at the cost basis. This would be whatever the cost basis of the property is at that point (taking into consideration improvements and depreciation).
But, I was wondering if anyone else had a better solution or a correction for my method above.
Thanks.
Re: Accounting treatment of deed in-> out - Posted by Natalie Smith
Posted by Natalie Smith on October 08, 2004 at 22:33:19:
This isn’t an answer to your question, but I also have properties owned in an LLC. Use a commercial lender instead of a residential lender. Usually a small, local bank can help. That way you can keep the titles in your LLC.