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What are the tax consequences for transferring assets from incorporated entity taxed as a S Corporation to a LLC with the same owners to separate operations from assets.

Forum|Forum|6 years ago
December 7, 2019
8 replies
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I have an S Corporation that is looking into moving the assets to another llc for liability protection. The new LLC will have the same ownership as the S Corp. The sole purpose is to separate the operations from the assets for liability protection. Are there tax consequences for this?

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Best answer by abctax55

Assets moving out of a Corp are deemed sold at fair market value. Probably generating a gain...depending on depreciation taken.

Intuit Community Champion

Intuit Community Champion

LLC taxed as what?

hcpaAuthor

Level 2

S Corp

Level 15

The phrasing "S corp to *another* LLC is a bit confusing.

HumanKind... Be Both

Intuit Community Champion

Intuit Community Champion

Have the company's attorney structure it as a spin-off type reorg. No tax consequence then.

hcpaAuthor

Level 2

Can you elaborate on what a spin off type reorg means?

hcpaAuthor

Level 2

Can you elaborate on what a spin off type reorg means?

Intuit Community Champion

Intuit Community Champion

It means "send your client to their business attorney to do a spin-off type reorg." It's not something you can accomplish.

https://www.thetaxadviser.com/issues/2019/may/structuring-divisive-reorganizations.html

Level 15

Assets moving out of a Corp are deemed sold at fair market value. Probably generating a gain...depending on depreciation taken.

HumanKind... Be Both