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Posted by Drew Edmundson on November 30, 2006, 1:41 am
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>> I would like to transfer publically traded stocks (like
>> Intel) from a personally titled Ameritrade account into a
>> new Partnership (LLC) account with Ameritrade. So long as I
>> maintain a majority control over the Partnership by
>> receiving the proper percentage of membership interest in
>> the LLC for the current market value of the stock
>> transferred, it is my belief that this would not be
>> considered a taxable event by the IRS under either Section
>> 721, Section 351, or Section 354. My personal basis on
>> each stock investment would therefore transfer to the LLC
>> and become the cost basis for each investment that the LLC
>> owns.
>>
>> The LLC will hold these investments long-term (possibly make
>> some new purchases with cash) and potentially (yet rarely)
>> sell and re-invest in other stocks (asset re-allocation).
>> In a sense, this would be an "investment company / LLC /
>> partnership". Section 721 and 351 makes note of an
>> exception to the rule referring to an "investment company"
>> (as defined in Section 351).
>>
>> Also, publically held stock may be considered an
>> "intangible" asset. Could you please explain whether section
>> (d) of Section 721 ("Transfers of intangibles") needs to be
>> considered in regards to this transfer in order to keep it a
>> non-taxable transfer?
> The paragraph you need to look at is 721(b), assuming the
> LLC is really a partnership for tax purposes.
Sorry, I see that you had already noticed this paragraph.
---
Drew Edmundson, CPA
Cary, NC
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