okie wrote:If the land is solely owned by Reid, then it is sold to an LLC which is not solely owned by Reid, how is that reported as the same, Parados? It was sold for shares in the LLC, not wholly owned by Reid. I would like to sell my property to an LLC for shares in an LLC with other owners and avoid income tax on the sale, so Mr. Lawyer, tell me how I can do that legally? Shares in an LLC have value, the same as cash.
Rush hasn't talked about this much besides in passing, and not about this aspect. I am simply trying to figure this out, using simple common sense.
An LLC doesn't have to have shares to begin with. It isn't required to. You are starting from a false assumption then running all over the place.
Start here..
http://www.corporate.com/entity-comparison.jsp
A couple of things to note
Quote:The members typically contribute money or services to the LLC and receive an interest in profits and losses
In this case Brown and Reid each contributed property to the LLC
Quote: The entity is not taxed (unless chosen to be taxed); profits and losses are passed through to the members
The property was an investment property. The IRS would have seen the property as not passing to anyone else's hands simply because it went from a private individual to a dba (doing business as) entity. Reid contributed property and was a member of the LLC. Lets look at this from a tax issue. Reid became a member of an LLC which has no monetary value. Reid had property worth $400,000. He sold that property to the LLC for $400,000. He would have to report the sale on his personal income tax but then he bought land in the LLC and would report the purchase on his income tax.
For tax purposes nothing happened. He had the same property he had to begin with. He could have sold the land for $1 or $1 million. The tax consequences would have been the same. The transaction is a wash because no matter what he "sold" it for no money changed hands and he retained control of the property through the LLC.
