Transferring assets to a C-Corp

Discussion in 'Tax' started by Brad A, Jan 20, 2004.

  1. Brad A

    Brad A Guest

    I am the sole owner/shareholder of a California C-Corp that
    is now inactive but which is current with respect to state &
    federal filings. It has a sizeable tax loss carry-over owing
    to the dot-com bust.

    Is it possible to transfer & what are the tax implications
    of transferring real estate currently in my name (eg. a
    vacant lot) for subsequent sale by the corp ?

    I'm looking for some way to make use of my already declared
    tax losses.

    TIA,
    -brad a.

    << ------------------------------------------------->>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org >>
    << ------------------------------------------------->>
     
    Brad A, Jan 20, 2004
    #1
    1. Advertisements

  2. (Brad A) wrote:

    > I am the sole owner/shareholder of a California C-Corp that
    > is now inactive but which is current with respect to state &
    > federal filings. It has a sizeable tax loss carry-over owing
    > to the dot-com bust.
    >
    > Is it possible to transfer & what are the tax implications
    > of transferring real estate currently in my name (eg. a
    > vacant lot) for subsequent sale by the corp ?
    >
    > I'm looking for some way to make use of my already declared
    > tax losses.


    You can make the transfer. But check with your CPA to see
    if it will actually help.

    Section 351 of the Internal Revenue Code says,

    "No gain or loss shall be recognized if property is
    transferred to a corporation by one or more persons solely
    in exchange for stock in such corporation and immediately
    after the exchange such person or persons are in control (as
    defined in section 368(c)) of the corporation."

    Section 368(c) says,

    "For purposes of part I (other than section 304), part II,
    this part, and part V, the term 'control' means the
    ownership of stock possessing at least 80 percent of the
    total combined voting power of all classes of stock entitled
    to vote and at least 80 percent of the total number of
    shares of all other classes of stock of the corporation"

    In general it is thought best for individuals in your
    situation to own real estate and lease it to the
    corporation. The reason is that when you do that you can
    take depreciation deductions which might be lost when the
    property is owned by the corporation.

    Another thing to remember is that, while the corporation may
    be able to take advantage of past deductions against future
    net income, when the money comes out of the corporation, you
    will pay full tax on it at that time, unless the tax-free
    dividend provision is passed.

    Stu

    << ------------------------------------------------->>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org >>
    << ------------------------------------------------->>
     
    Stuart O. Bronstein, Jan 21, 2004
    #2
    1. Advertisements

Want to reply to this thread or ask your own question?

It takes just 2 minutes to sign up (and it's free!). Just click the sign up button to choose a username and then you can ask your own questions on the forum.
Similar Threads
  1. Tabernash
    Replies:
    0
    Views:
    638
    Tabernash
    Dec 20, 2006
  2. Brunsi
    Replies:
    5
    Views:
    347
    Larry Williams
    Oct 22, 2004
  3. bob
    Replies:
    0
    Views:
    395
  4. Lexmark
    Replies:
    2
    Views:
    247
    Brett Weiss
    Jul 25, 2003
  5. Lexmark
    Replies:
    0
    Views:
    244
    Lexmark
    Jul 25, 2003
Loading...

Share This Page