karlsiegert[at]yahoo.com (KRS) wrote:

<skip
To be sure that you get to take advantage of the exclusion
of gain on the sale of your personal residence, you'll need
to find a transaction that's treated as a sale. A
contribution to the partnership is not treated as a sale,
*and* you are not allowed to create a fair market value tax
basis for the property in the partnership without a sale.
Furthermore, [and what complicates this deal] you are
entitled to a capital account in the partnership that's
based on fair market value, *not* on tax basis.

And there may be complications when you sell depreciable
property to yourself or an entity that partly owned by you.
I forget the details, in my dotage.

This is way more complicated that you think -- maybe more
complicated than you're willing to accept. And you won't
get a complete answer from the tax message boards. Sorry.

Meet with a tax pro, face-to-face. Tell him you want to
sell your home for its full fair market value, *and* you
want to sell it to an LLC that you own part of. He should
at least scratch his head and then ask you if that's
*really* what you want to do. It can be done, but you may
be offended how complicated it is.

LoTax

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"Gene E. Utterback, EA" <eagent[at]alliancetax.com> wrote:
- quote -

When appreciated property is contributed to a partnership,
the partnership's basis in the acquired property is the same
as the contributing partners basis in the property, then
that partner's basis in his partnership interest equals his
basis in the contributed property.

I am not aware of any tax provision to adjust the basis of
property in a partnership non-recognition event like this.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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"KRS" <karlsiegert[at]yahoo.com> wrote:

- quote -

You need professional help, I suggest you get it before you
do anything.

Your situation requires a complete understanding of the
facts and circumstances which simply is not going to happen
in this forum. Additionally, you need to understand the
concepts of "INSIDE" and "OUTSIDE" basis of a partnership
interest as well as knowing what the holding period rules
are for distributions from a partnership.

In a nutshell, from memory, with the caveat that I would
have to double check the rules myself, and NOT to be relied
upon without professional help - you should be able to
contribute the property to the LLC and have the LLC value
the property at FMV. However, this will NOT change your
basis in the LLC investment. As long as the property stays
in the LLC there should be little problem. However, if the
property is distributed to an LLC member within (I THINK) 5
years, YOUR adjusted tax basis will be used to calculate the
gain. Additionally, when you withdraw cash from the LLC any
amounts that come out over and above your basis in the LLC
interest will be distributions in excess of your basis and
will be taxable to you.

Good luck,
Gene E. Utterback, EA

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"KRS" <karlsiegert[at]yahoo.com> wrote:

- quote -

You'd have to sell it to the partnership and receive actual
cash for it. If you simply contributed the property, when
it gets sold, the built in gain on it will be kicked back to
you along with 1/2 of the gain from after the time of
contribution. In other words, you cannot raise the basis
without a sale here.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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I have home that's being converted to a rental property.
I'd like to transfer/sell the property to a two-member LLC
(which will have a seperate taxID# from my soc.#)

When I do so, can I adjust my cost basis to the fair market
value at the time of the transfer/sale? Reason is because
the home has been my primary residence for the past 5 years
which isn't taxable if I sold now. However, if I sold in 4
years, for example, the capital gains would be taxed. And
it would be taxed based on the cost purchased 9 years before
that time. Something I'd like to avoid.

I live in Michigan.

Any help would be appreciated.
Thanks.

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