Acctg Treatment Of Deeding In/out Of LLC
Lenders often want you to deed a property out of an LLC (a multi partner LLC in this case) to get financing. So, you deed it out to the person who is qualifying and signing for the loan and they even say that you can go ahead deed it back into the LLC after the financing is complete. Similar to a with a trust where they want you to take it out of the trust, do the financing, then put it back in.
My question is, if you do this, how should you go about the accounting treatment of it. I know that it is legally and technically a sale from the LLC and purchase by the individual and another sale back to the LLC so I'd like to recognize it as such instead of just ignoring it like it never happened.
But, how best to record this so as to not cause a taxable event? Initially I thought it'd be best to try to transfer the property at the cost basis. This would be whatever the cost basis of the property is at that point (taking into consideration improvements and depreciation). Would the transactions need to be recognized on the LLC's and individual's tax return?
But, I was wondering if anyone else had a better solution or a correction for my method above.
Thanks.
My recommendation is to contact a CPA. They are in the business to help people, like you, to find a solution to tax issues. Of the CPA types, find a single person CPA. They have higher ethical standards the the multi-person firms out there.
Be prepared to be charged a fee for the consultation.
Go see one right after 10/15. After they're done with returns, they are less busy and you can probably get more time with them and better answers.
The worst times to contact a CPA is during March, April, September, and October. If you find a CPA that also does quarterlies, then the month before the quarter ends is a really bad month.
I've always done all my own tax and accounting work so I don't use one on a regular basis but I'm not averse to contacting a good CPA. My problem is that it's just so difficult to find a decent one. At a recent REIA event, someone who billed themselves as a RE accountant couldn't even discuss with me several topics b/c they didn't have the knowledge. They *at least* have to have as much knowledge/experience as me or how can I justify using them? Does anyone have a *good* one that knows the answers to complex RE issues without having to do research on your dime?
Alternatively, what I'm really looking for is an investor who applies the type(s) of approaches that I'm asking about above. Even if the investor isn't an accounting expert they would certainly know a few of the details about what I'm asking about.
Thanks again.