All Forum Posts by: Willem VanBakergem

Your response gave me an idea. If the LLC continues as long as the MDU property exists, could we structure the LLC as a cooperative ownership structure and sell the units as memberships shares (like any housing cooperative). At each coop sale the buyer would be taking on some of the debt and be buying in with equity. Over time ( a year or so) we could take out 95%plus of our equity and the LLC would maintain the 1031 liability. The property would just continue along as a coop forever. Any new sales would be merely a member leaving and a new one entering. Is this scheme crazy?

Thanks for your responses. If the LLC is indeed the taxpayer and internal changes in membership do not affect the 1031 status of the property, then I suppose that the "swap 'til you drop" tactic does not apply. The LLC never dies. The heirs (or the remaining or other new share owners) will inherit the 1031 liabilities that continue with the LLC. Correct?

There are three 33% partners in an LLC and six equally distributed heirs (6). We'd like to simplify the next generation's responsibility and sell one third to one partner in a cash out deal. Two partners would remain in the LLC. There would only be board minutes and no courthouse record changes. Could the 1031 liabilities remain with the LLC and the cashed out party avoid cap gains on the old basis ($50K farm from 1950)? Could the cashed-out partner use the 2012 value as the basis for cap gains for this year's taxes? We would discount the cash out a bit considering the LLC would retain the old basis and the 1031 liabilities. We might sell another third later (would be half then, of course). Essentially, is the 1031 liability assigned to the LLC or each partner?