All Forum Posts by: Joseph Shaggs

@Dave Toelkes - solid answer!  Thanks for clarifying transfer tax versus income tax.  Is there some resource that discusses the scenarios under which the transfer does or does not create a capital gain?  Same for maintaining/losing passive loss allowance?

Very good point about insurance policies!

@Brian M Sweeney - thanks for the heads-up!

@Brian M Sweeney - Yes, there is a mortgage on the property.

Thanks so much for the detailed reply. In terms of #2, is there no tax consequences because the transfer is being made in a way that doesn't materially change ownership of the underlying property (it's 50/50 owned by two people and transferred to an LLC that is 50/50 owned by the same two people)? Or is it more general - like quite literally you could take any property and transfer it from you to any arbitrary LLC and there would be no transfer tax (at the federal level)?

Sorry, I have found the relevant information about a single member LLC (SMLLC): https://www.irs.gov/businesses/small-businesses-se...

You mentioned that the rules are a bit complicated for partnerships. Lets say the LLC is owned, 50/50, by a husband and wife. Let's also say that the LLC is registered as a Partnership with the IRS, ignoring the option to use an SMLLC in community-property states. If this is the case, does the transfer of a property, owned 50/50 by a huband and wife, to the LLC owned 50/50 by them, trigger a taxable event?

On the state side, in New York the law states that the following is exempt from transfer taxes: "a deed that effects a mere change of identity or form of ownership or organization but only to the extent that the beneficial ownership remains the same."  Is it similar for federal taxes?

What's an "SMLLL"? To clarify, you are saying that there is a type of entity that can be considered an LLC (so you would create an LLC with some state?), but for which you don't need an EIN and can just report it on your personal return?

Hi Ashish - Thank you so much for the reply! In the past, when I have created an EIN for an LLC, the IRS has asked whether the LLC should be treated as a corporation or partnership, for which I've only ever selected partnership. But perhaps "partnership" means different things in different contexts? But yes, I would be the sole member. Would you happen to know if New York imposes a transfer tax?

Hello! What are the tax implications of an individual deeding the title of a property to a partnership or corporation? Specifically, if the title to a property is in my name and I deed it to an LLC (setup as a partnership) that is wholly owned by myself, does it trigger a taxable event? How should I think about this transaction?

Hi Basit - Thank you for this response.  Can you say more about depreciation recapture?  I'm not an accountant so please excuse my ignorance here...It seems that, upon sale, the basis is set to the sales price of the property.  When you depreciate an asset, aren't you just lowering the basis?  The capital gains is typically the sale price minus the basis, right?  But if the basis is set at the sale price, then the capital gains is $0 and there would be nothing to recapture?  

Hello All!

Posting this to 1031 Exchanges because it seems most related, sorry if I messed that up!

Based on what's been released about the Opportunity Zones program, I'm having trouble figuring out the following:

1. It seems that if you hold a property for 10 years, then when you sell there will be no capital gains.  I believe this is because the cost basis of the property is automatically set at the sale price, but maybe I'm wrong?  Is it possible to depreciate the property?  If you depreciate the property to $0 and then sell, is there still no capital gains?  And do we truly have the option to sell the place anytime after 10 years (meaning you can hold it for a very long time and then sell with no capital gains?)

2. Does the program apply to individuals?  Or does the purchase have to be made by a corporation or partnership?  It seems that the updated guidance is that it is a self-certification process.  I read somewhere that 90% of the assets of the "opportunity fund" need to be in an opportunity zone.  So if it's possible to purchase as an individual, does that mean that 90% of the individual's assets need to be in an opportunity zone?

3. What about state taxes?  Does it depend on the state? (i'm in New York).  Or do the same rules at the federal level apply to state (no capital gains if held for 10 years, deferral of existing capital gains if rolled into property in opportunity zone)

Best,
Joe