Selling Scorp property

[judys3]

I have an S-Corp that has only asset of "New building" from 1999 set up by previous tax preparer.  The client is now selling said business and property the building is located on.  How do I proceed forward and sell this building when the property is not a part of the tax return?

To add to this also.  He has a personal financial statement that says "Investment in ___________ $2,190,000.00"

He is not selling the business itself only the land and building.

Thank you.

[IRonMaN]

What name is on the real estate title?

[judys3]

I have not seen that.

But to add I have a personal financial for him that has been produced for years with him having invested $2,190,000.00 in said company.  

[JRC]

Why isn't the building part of the Tax Return?

If the Corp owns the building that is being sold you should report the sale on the Corp books and tax return?

If the Corp was renting the Building than the Owner of the building  would report the Sale on their tax return.

If neither, than I am confused as well.

[judys3]

Yes thank you. I am confused as well. We have only worked with this customer a couple of years.  I did not have privy to information before me only the tax return and asset list.  I am confused and will have lots of questions.  I know the TP will not be able to answer any of those questions.  It will be fun.

I know the Scorp had not paid rent to the TP.  The Scorp did pay all property taxes.  

So in the end it will be whos name the title is in to where the sale goes.......I'm sure as things progress I'll reach out further.

[qbteachmt]

There are many reasons S Corps should not hold real estate. Here we see it, again.

"The Scorp did pay all property taxes."

As business expense? Or as distribution? Is this person the only shareholder?

"whos name the title is in to where the sale goes"

You can't sell what you don't own.

His financial statement is investment in the Company, and nothing states there is land and a building for either the individual or the business?

And make sure to clarify if he is selling the business, and/or the S Corp entity. Those are not synonyms.

[judys3]

I guess that was my initial question.  How do does the Scorp sell something that doesn't show to be owned by the Scorp.  I will find out more information.

The property taxes were expensed by the Scorp.  The Scorp paid all expenses that concerned the property.

The investment does not state what it was for other than it was an investment.

The tp is the only shareholder and is not selling the actual business but the land and building.

[abctax55]

Wow... this could be a bit of a mess.

And FWIW - Personal financial statements may have 'inflated' numbers on them - were these prepared by your client by any chance?

Anyone want to bet on whether payroll has been done by the S-Corp?

[judys3]

Yes I agree.

The personal financials were completed by the previous preparer.  

Actually, yes payroll has been done.