Land trust and S-corp - Posted by Robert Hall

Posted by JHyre in Ohio on March 19, 2003 at 13:26:32:

In re #1: Beneficial interest to him first, then to S-corp.

In re #2: S-corp is not normally best for rentals, for 2 reasons:

a) Losses that you can take tend to be limited due to the bizarre interaction between S-corps and debt under the tax rules. That’s almost never a problem for LLC’s AND

b) Contributing properties to LLC and “equalizing” ownership and/or distributions when one member contributes more than another is much easier with LLC. In the case of S-corp, if he contributes more, he’d have to buy stock, meaning that he also gets a larger ownership interest and share of profit and distributions than you. With an LLC, there are an infinite number of ways to structure the transaction, though it would complicate the accounting. The use of a land trust doesn’t impact this analysis, though you may pay extra transfer tax in some states (e.g. - PA and AL).

John Hyre

Land trust and S-corp - Posted by Robert Hall

Posted by Robert Hall on March 18, 2003 at 11:12:37:

Hello All,

I recently purchased Bill Bronchick’s courses… “How to Create a Bulletproof Corp.” and “Step by Step Guide to Land Trust”. Both are very good guides. However I have a couple of questions about land trust.

My son and I recently formed a S-corp this year. We own 50% each. Last year we bought four rental properties in a verbal partnership. Our accountant advised us to split the profit/loss of the properties and each of us claim our half on our 1040 tax return this year.

(1) The properties and loans are all in his name. We plan on doing a land trust on each one of these properites. We want the beneficiary to be the S-corp. Should we first put the houses in a land trust listing him as the grantor and beneficiary and then transfer the beneficary rights at a later date to the corp or should we just list the corp as beneficary on the original trust aggreement?

(2) Also, he has three other rentals, he had bought in the past, that he wants to move into the S-corp using a land trust. Will the move produce any additional tax obligations for him or myself since the S-corp is owned by both of us?

Thanks in advance for your help.