Optimizing sale of building and business to daughter
Client has:
Multi-unit commerical rental building held in a partnership (husband and wife), book value $227k with $55k acc. depreciation for basis of $172k
Restaurant in the building held in an S-corp (husband), book value $44k with 15k acc. dep. for basis of $29k.
Taxable income outside of this transaction is less than standard deduction.
Client wants to sell all to daughter for $425k.
1. Related party transactions interact here. What are the effects on transferred basis, recaptured depreciation, and amounts of gains taxed at ordinary vs. capital rates.
2. If building was transferred via quit-claim (or warranty deed) for $1.00 and the business is allocated the $425k sale, what are the impacts on the above.
3. Is there an alternative sale format that best minimizes the resultant tax impact?
Thanks to this community, always been a fantastic resource with great minds
