frank2236
Level 2
12-06-2019
04:31 PM
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Building bought about 10 years ago and put into S-corp against my advice. About a year ago sole shareholder paid off the mortgage and began collecting rent from the S-Corp (saying she was now the owner). How do I transfer the building to the shareholder without triggering a tax. Can I just record a distribution of an amount equal to basis? Must any such distribution be at market value? Must it be a purchase a current market value?
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abctax55
Level 15
12-06-2019
04:31 PM
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" How do I transfer the building to the shareholder without triggering a tax."
You can't. It comes out of the Corp @ FMV.
And this is the shining example of WHY real estate (or, any appreciating asset) should never be put into a Corporation.
HumanKind... Be Both
frank2236
Level 2
12-06-2019
04:31 PM
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agree but she would not follow my advice at the time - would it be better to close the S-corp, distribute the assets and start over?
abctax55
Level 15
12-06-2019
04:31 PM
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Maybe...but as I don't have all the info, I can't answer that question.
HumanKind... Be Both
TaxMonkey
Level 8
12-06-2019
04:31 PM
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unclear why you think that would be different? Distribution of property from an S-corp is deemed a sale at FMV. Get an appraise to low ball the FMV, and pay your taxes.
frank2236
Level 2
12-06-2019
04:31 PM
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Thanks - that's what I thought too - just hoping there is a way out of this
