Property Depreciation

[LaraMultiservices]

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?

[qbteachmt]

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.

[LaraMultiservices]

He gave the LLC the property for $100 (granted). It's a commercial property and he is not a partner in that LLC. 

[IRonMaN]

Use the $120,000 as her basis for depreciation.

[qbteachmt]

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.

[sjrcpa]

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.

[BobKamman]

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.  

[Skylane]

Fwiw, people do stuff like this for 2 purposes only.

1. To annoy their tax preparers 

2. To pay legal fees

[BobKamman]

@Skylane 

3.  Because they heard about it at a seminar.  

[LaraMultiservices]

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?

[sjrcpa]

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.

[BobKamman]

Nor do we know if the LLC is a disregarded entity, or has elected some other tax treatment.  

[IRonMaN]

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.

[PATAX]

👍 sound opinion there Iron Man... Just my opinion😉🐕