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Taxpayer purchased a property for $120,000, he then granted this property to his wife's LLC for $100. Would the LLC be able to claim depreciation for the cost of the property ($120,000) ?
P.S. If the LLC cannot claim the depreciation, would he claim this property as a loss? If so, where would this "loss" go?
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What is "granted?"
What is "Property?"
Why does she have an LLC? What type of property is this? Is he a partner in that LLC?
All of this is too vague to help; details matter.
Don't yell at us; we're volunteers
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He gave the LLC the property for $100 (granted). It's a commercial property and he is not a partner in that LLC.
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Use the $120,000 as her basis for depreciation.
Slava Ukraini!
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You cannot depreciation the entire Real Estate with Buildings and Lot, as one unit. Land does not depreciate.
$100 for the transfer is a sale, not a "grant." Who was on the title, who still is on the title, is there also a mortgage or other debt on the property. Did it All get put into the name of the LLC?
If this is a Community Property State, you can't give something to someone who already has a rightful ownership interest in it. She can put it into the LLC name.
"would he claim this property as a loss?"
Sheesh; who is guiding these people? There needs to be some legal advice, which you cannot get from strangers on the web.
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No gain or loss is recognized on transfers between spouses.
No gift tax consequences for gifts to spouses, as long as both are US citizens.
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Sounds like he's trying to stay one step ahead of creditors. The $100 is probably the traditional $5 "and other valuable consideration" found in quitclaim deeds, but with inflation. I would put this file in the "get your fees up front" stack.
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Fwiw, people do stuff like this for 2 purposes only.
1. To annoy their tax preparers
2. To pay legal fees
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I asked him who gave him this advice because I didn't understand the reason why . He purchased the commercial property for $120,000 cash and then sold it to his wife's LLC for the $100. It is now under the wife's LLC but now how do we claim depreciation on $100? I'm not sure if he would even be able to claim it as a loss on his personal taxes. So do you think it wouldn't be right to put the original price ($120,000) instead of the $100 for the depreciation on the LLC?
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You're not getting this.
No loss allowed for husband.
Wife's basis = husband's basis (maybe plus the $100).
You can only depreciate the building and improvements; not the land.
You can only depreciate if used in a trade or business. You haven't mentioned what use will be made of the property.
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Nor do we know if the LLC is a disregarded entity, or has elected some other tax treatment.
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Folks should stick to what they do well and let someone else do the stuff they aren't familiar with. As someone else around here says - just my opinion.
Slava Ukraini!
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👍 sound opinion there Iron Man... Just my opinion😉🐕