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Renting building owned by LLC to LLC member collegebedlofts 02-16-2008
Posted by collegebedlofts on February 16, 2008, 1:11 am
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 The situation is I have a small business that I run through a single
member LLC. I purchased a building under my personal name. Can I
rent the building to the LLC? The income generated would be passive
income to me.

Thanks,
JV

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Posted by Paul Thomas, CPA on February 16, 2008, 9:38 am
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> The situation is I have a small business that I run
> through a single member LLC. I purchased a
> building under my personal name. Can I rent
> the building to the LLC?



Certainly.





> The income generated would be passive
> income to me.



Yes it would.




--
Paul A. Thomas, CPA
Athens, Georgia

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by JV on February 16, 2008, 4:14 pm
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wrote:
>
> > The situation is I have a small business that I run
> > through a single member LLC.  I purchased a
> > building under my personal name.  Can I rent
> > the building to the LLC?
>
> Certainly.
>
> > The income generated would be passive
> > income to me.
>
> Yes it would.
>
> --
> Paul A. Thomas, CPA
> Athens, Georgia
>
> --
> << ------------------------------------------------------- >>
> << The foregoing was not intended or written to be used,   >>
> << nor can it used, for the purpose of avoiding penalties  >>
> << that may be imposed upon the taxpayer.                  >>
> <<                                                         >>
> <<   The Charter and the Guidelines for submitting posts   >>
> <<  to this newsgroup as well as our anti-spamming policy  >>
> <<                  are atwww.asktax.org.                 >>
> <<         Copyright (2007) - All rights reserved.         >>
> << ------------------------------------------------------- >>

Thanks Paul for the quick reply. I have a new tax advisor this year
who is doing my taxes (I have always done them myself in the past).
He said that because I have elected to be disregarded as a corporation
for tax purposes and to file a schedule C and have income pass through
to my personal income tax, that I can't rent the building to my LLC.

I have always assumed that this is correct, however my tax advisor (a
CPA) says since I have the LLC going on a schedule C, that I am
basically renting a building to myself.

Going back to my original question, and with electing to be
disregarded as a corporation, can I rent the building to my LLC?

Thanks,
JV

========================================= MODERATOR'S COMMENT:
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--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Harlan Lunsford on February 16, 2008, 5:04 pm
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JV wrote:
> wrote:
>>
>>> The situation is I have a small business that I run
>>> through a single member LLC. I purchased a
>>> building under my personal name. Can I rent
>>> the building to the LLC?
>> Certainly.
>>
>>> The income generated would be passive
>>> income to me.
>> Yes it would.
>
> Thanks Paul for the quick reply. I have a new tax advisor this year
> who is doing my taxes (I have always done them myself in the past).
> He said that because I have elected to be disregarded as a corporation
> for tax purposes and to file a schedule C and have income pass through
> to my personal income tax, that I can't rent the building to my LLC.
>
> I have always assumed that this is correct, however my tax advisor (a
> CPA) says since I have the LLC going on a schedule C, that I am
> basically renting a building to myself.
>
> Going back to my original question, and with electing to be
> disregarded as a corporation, can I rent the building to my LLC?
>
And I'll have to go along with your CPA on this one. (Forget anything
relating to the word "corporation"; it just don't apply in this case.

While legally you can go through the paperwork of renting the building
to your LLC, there's no need. Just use the building and report
everything, e.g. taxes, depreciation, repairs,... on your schedule c.
Isn't that what he said?

ChEAr$,
Harlan Lunsford, EA n LA

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Gil Faver on February 16, 2008, 5:28 pm
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> JV wrote:
>> wrote:
>>>
>>>> The situation is I have a small business that I run
>>>> through a single member LLC. I purchased a
>>>> building under my personal name. Can I rent
>>>> the building to the LLC?
>>> Certainly.
>>>
>>>> The income generated would be passive
>>>> income to me.
>>> Yes it would.
>>
>> Thanks Paul for the quick reply. I have a new tax advisor this year
>> who is doing my taxes (I have always done them myself in the past).
>> He said that because I have elected to be disregarded as a corporation
>> for tax purposes and to file a schedule C and have income pass through
>> to my personal income tax, that I can't rent the building to my LLC.
>>
>> I have always assumed that this is correct, however my tax advisor (a
>> CPA) says since I have the LLC going on a schedule C, that I am
>> basically renting a building to myself.
>>
>> Going back to my original question, and with electing to be
>> disregarded as a corporation, can I rent the building to my LLC?
>>
> And I'll have to go along with your CPA on this one. (Forget anything
> relating to the word "corporation"; it just don't apply in this case.
>
> While legally you can go through the paperwork of renting the building to
> your LLC, there's no need. Just use the building and report everything,
> e.g. taxes, depreciation, repairs,... on your schedule c.
> Isn't that what he said?
>
> ChEAr$,
> Harlan Lunsford, EA n LA


wouldn't that start you down the slippery slope of "piercing the corporate
(or LLC) veil"?

The LLC is a separate LEGAL entity. I would have the LLC rent the building
legit, and put the rental income on schedule E and the rental expense on
schedule C. Why would that not be permitted?

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

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