LLC Or Trust
I have just purchased a rental property in my name but want to transfer the deed to my LLC. There are three members to the LLC, but do not contribute any incomes to the purchase or rehabing of properties. They only use their name and credits to purchase. I will normally give them a fee for doing so. How do I prevent them from having to pay taxes on the CG since the gain is paid to me when it is sold (held for less than a year)
Their participation is strictly passive.
The profits from limited liability companies must generally be distributed on a prorata basis to the underlying members/owners. There are some aggressive positions out there that I'm not sure will fly where the Operating Agreement allocates all of the profits to certain classes of members, etc., but you would need to visit with an attorney who specializes in LLCs in the state in which you are located to see what they think.
You may want to look at other structures whereby they guarantee the debt, but are not part of the LLC and/or on legal title. I doubt that most financial institutions would allow this, but you might be able to meet with them and find a compromise.
[addsig]