USA Changes when Electing S Corp status for LLC

[#22]

Hello!

I'm presently trying to mitigate the fallout of an ill-advised move to file as a S Corp for a few real estate LLCs.

I have 2 situations I'm trying to work on remedying.

1. I still haven't filed my 2015 returns. I've met with a few CPAs and accountants who have told me I have a "Massive" mess to clean up as far as working on and completing my 2015 returns. I've heard a lot of general remarks, but nothing fully descriptive of what it will take to accomplish this. I'm concerned, because no one will so much as guess what it will cost to bring things in line.
Can someone kindly tell me what I need to do to accomplish this properly?

2. As far as unwinding this mess - what are my options? A little detail: 3 LLCs holding real estate. One of the 3 has debts and basis greater than the market value. The other two have no debt service and have basis on the homes of less than market value. I would consider selling the homes to accomplish this and would prefer, if possible to do a 1031 on the deal, although I'm not sure it would remedy my challenges presented with the S Corp status.

Thanks in advance for sharing your wisdom!

#22

 

[DTA93433]

I am surprised that the few CPA's you've met couldn't give you a more detailed explanation as to what it would take to fix the situation you're in.

 

[Tyson]

Find another CPA. Explaining the situation, helping you decide what to do moving forward, and helping you file your tax returns does not seem like a very complicated matter.

What are you trying to do with your properties? You might have to pay some capital gains tax on the amount of your liabilities assumed by the corporation for the property where the liabilities are greater than the market value of the property. The others you probably won't owe any capital gains tax on. You can transfer them to the corporation without recognizing the gains as long as you are the primary owner of the S corporation.

The problems arise when you want to take the buildings out of the S corporation. If the properties are sold or distributed, the gains will be recognized and you'll have to pay the subsequent taxes on them.