Transfering assets to a corp.?
I bought a tax cert. a couple of days ago,because it was a good deal,I plan on incorporating Jan 2. Can I sign the cert. over to the corp if so what would be the tax implications to me.This is a great sight
I want to wish all a safe & happy holiday
Please do not drink and drive
TIM
TJBab:
Great Going!
I'd hold onto the Cert until next year. Take the deduction(100% full face amount) for this Year 2002.
Next Year(2003) when you cash in on it under your Corp. you won't be taxed twice once it pays off.
And I believe(check with you Tax Pro) that you would probably only have to report the PURCHASE AMOUNT of the CERT as being 're-imbursed' through sale to your Corp.!
Don't try this on your own get a tax pro to help you sort out all of the details ---next time around it should be a breeze for you to do!
Keep in mind that any transfer of property in an exchange is generally taxable in the same manner as a sale for cash. The gain or loss in the exchange will be measured by the fair market value of the property received and the basis of the property transferred. One of the exceptions to this general rule is where a person transfers property to a corporation solely in exchange for its stock if immediately after the exchange he is in "control" of the corporation. The good thing is that it does not have to be a newly formed corporation, as long as the transferor or transferors receive stock and are immediately after the exchange in "control" of the corporation.
Internal Revenue Code §351 covers the details of this issue.
Permitting a nontaxable transfer to a controlled corporation will postpone the recognition of gain or loss until the stock received in the transfer is ultimately disposed of by the transferor. This is accomplished by attributing to the stock the same basis as that of the property originally transferred in exchange. More importantly, the property transferred will retain its basis in the hands of the corporation.
For accounting purposes, you can write off the asset over the period of time for such asset. In preparing Financial Statements, deductibles are Income Statement items and write-offs are Balance Sheet items.
The rules regarding transfers of property are technical in nature and there has been a lot of misunderstanding on the transferring assets to businesses. If in doubt, please contact your accountant for assistance.
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