Moving real estate from S-corp to LLC

[Shannon Kiefhaber]

My family has a large portfolio of properties owned in an S-Corp (LLCs didn't exist when they started investing!) and we are now wanting to start transitioning ownership of the portfolio to the next generation. Our CPA has advised that it is more advantageous to hold RE in LLCs rather than continuing with the S-corp. To avoid incurring a large tax liability they have proposed a detailed entity restructure including a S-Corp inversion to tax partnership. Has anyone else ever dealt with this scenario? A simple solution is to divide ownership of the exiting S-Corp however then we are still left with all the assets held in an S-Corp which to my understanding is not as flexible as ownership in an LLC. Any advice from those who have done this transition before would be greatly appreciated!

[Shannon Kiefhaber]

I appreciate everyone's comments. Just to close the loop I will not be making any changes with the properties in the S-Corp as there is not a good solution. I will be gifted ownership in the S-Corp and begin to reposition properties by selling the ones in the S-Corp and buying new ones in a new LLC. I hope this is a good lesson for anyone else in a similar situation. Don't buy property in an S-Corp!!