Tax, SDIRAs & Cost Segregation
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback
Updated over 4 years ago,
Equitably Combining two LLCs
I have found myself in a problem that I need help resolving. I am not complaining here, this is a good problem to have, but a problem none-the-less.
Background - Almost three years ago, two partners and I created STH, LLC and purchased two 4-plexes. We have very recently signed a sale contract and want to 1031 exchange the profits. Until a couple of days ago, partner T (Travis) and I were under the impression that partner S (Steve) wanted to be cashed out upon the sale. From there Travis and I were going to exchange the remaining funds into a new property owned by STH, LLC.
Travis and I, along with (new) partner Ross, established Front Porch LLC about 2 months ago and started buying single family homes in our area.
Problem: The plan was to have Ross buy out Steve of STH LLC. This would have resulted in two LLCs with the same three partners, one necessitated by the 1031, the other being our main acquisition company. Now that Steve wants to stay in STH, LLC, Ross is going to be left out of STH and Front Porch LLC will become almost stagnant until more money can be made/saved. This is a problem because Ross was expecting to be buying SFH in Front Porch using his money and the money earned through the upcoming sale/exchange. I want to find an equitable solution to bring these two companies and four partners together without breaking the 1031 rules. The way I see it right now is that if I do right by Steve, I hurt Ross; and vice versa. I imagine there has to be a solution where everyone is a winner. I know this probably got a little confusing but are there any thoughts or suggestions?