Capital Contribution from one LLC to another LLC

[Travis Crane]

We are looking to start an LLC as a genuine construction company and would also like to use the company to purchase timber land. The thought is that the LLC would be used to cover the operating costs and as a tax shelter of the timber land operations.

In order to fund the LLC so that it has enough capital to purchase the timber land, I am working on a refinance of my house with cash out. I would then take the cash out and do a capital contribution to the LLC. The LLC would then in turn purchase the timber land.

My thought is that as the LLC generated funds, I would be able to take a capital withdrawal that I would be used to pay the refinanced mortgage.

My thought is that I would be able to use the LLC as a tax shelter for the operating costs of the timber land as well as a tax shelter for the funds being used to pay the mortgage.

My other thought is to start 2 LLCs. One for the construction business that is going to be generating funds and one that would be holding the timber land. (I would think 2 separate LLCs would be safer from an asset liability standpoint.) Can I provide a capital contribution to the construction business LLC and then take the money from that and do a capital contribution to the timber land LLC?