What are the tax consequences for transferring assets from incorporated entity taxed as a S Corporation to a LLC with the same owners to separate operations from assets.

[hcpa]

I have an S Corporation that is looking into moving the assets to another llc for liability protection.  The new LLC will have the same ownership as the S Corp.  The sole purpose is to separate the operations from the assets for liability protection.  Are there tax consequences for this?  

[PhoebeRoberts]

LLC taxed as what?

[hcpa]

S Corp

[abctax55]

The phrasing "S corp to *another* LLC is a bit confusing.

[PhoebeRoberts]

Have the company's attorney structure it as a spin-off type reorg. No tax consequence then.

[hcpa]

Can you elaborate on what a spin off type reorg means?

[hcpa]

Can you elaborate on what a spin off type reorg means?

[PhoebeRoberts]

It means "send your client to their business attorney to do a spin-off type reorg." It's not something you can accomplish.

https://www.thetaxadviser.com/issues/2019/may/structuring-divisive-reorganizations.html

[abctax55 · Accepted solution]

Assets moving out of a Corp are deemed sold at fair market value.  Probably generating a gain...depending on depreciation taken.