Entity woes and 1031 exchange

[Brian Christensen]

Hello,

I was referred to a lawyer who had me set up my entities with evident complexity for liability protection, but now my taxes are quite complicated. I hope to remedy the situation however I need a solid opinion on how I should proceed. Unfortunately my CPA is bogged down with tax season.

Problem: I might have a signed REPC contract to sell my rental in the next 2 weeks and I want to do a 1031 exchange.

My LLC is on title via quick claim deed recorded to the county. My wife and obtained a seller financed loan carried by the buyer (parents). I want to transfer title back to me/wife to get conventional bank financing and use a 1031 exchange (I have someone who I can use).

Confusion:

LLC structure: I own 10% and my LP owns 90%.

LP structure: Wife owns 87%, I own 10% and 3 kids own 1% each.

I know now the setup is cluttered with issues and I need to get the LP out of the LLC, but I want to move now on selling the rental.

Questions:

1) Can I just quitclaim deed title from LLC (Me+LP) to Me+wife and proceed with 1031 exchange? What are the implications of transferring title back to us or does this just pass through to personal taxes?

2) If I buy two more rentals within the 1031 tax window, should I change the LLC structure now or at the end of the year (recommended by a CPA assistant). Is changing the LLC structure a tax mess given the setup?

My plan is to fix the LLC structure to be 50/50 ownership with spouse.

Thanks beforehand for any expert opinions, Brian

[Jeff B.]

Go back to the lawyer that created this and MAKE him solve your problem(s).