transfer to s-corp - Posted by Rob FL

Posted by Millie I. on December 30, 1998 at 24:24:36:

I am transferring properties to a Land Trust with my LLC as the beneficiary. I’d like to know how the depreciation schedule is handled, and also how taxes are reported when using the LLC?

Thanks, and Happy New Year,
Millie I.

transfer to s-corp - Posted by Rob FL

Posted by Rob FL on December 29, 1998 at 21:12:41:

I own a rental property in my name. Plan on transferring into trust and then assigning the beneficial onwership to my s-corporation (to avoid due-on-sale). Trying to avoid capital gains tax, if any.

Question: If the transfer is made at the property’s current book value, can I continue using the same depreciation schedule or will it have to be restarted from scratch over another 27 1/2 years?

Anyone know the answer?

Re: transfer to s-corp - Posted by JHyre in Ohio

Posted by JHyre in Ohio on December 30, 1998 at 10:52:11:

You NEED to talk to a tax professional one on one to make sure that ALL the relevent facts come out. The rules surrounding depreciation are very technical and not very clear (what a surprise…). As a GENERAL rule, property contributed tax-free to a partnership or corporation is depreciated AS IF the corp./partnership stepped into the shoes of the original owner. You do not usually start over from scratch.
If you transfer heavily depreciated assets, you may be on the hook for so-called “recapture” taxes. Again, check with a professional, because every little detail counts when you are dealing with such convoluted rules.