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Posted by Katie on July 16, 2008, 9:20 pm
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On Jul 16, 4:28 pm, opus...@cox.net wrote:
> Hi All,
>
> Nuts & bolts...
>
> Own a Cafe with a 50/50% partner (LLC)
> Own the building/Land for which Cafe resides on with same 50/50%
> partner (S-Corp)
> Own another commercial rental property with same 50/50% partner
>
> All business is being done in the state of Connecticut.
> Partner and I have decided to divorce on all business dealings.
> Agreement as follows:
>
> I will buyout partenr on Cafe (LLC) and Building/Land (Corp) for
> $50,000.00
> $15,000.00 Cash, and $1,000.00 per/month for 35 months (Promissary
> note, 3rd position on Building/land)(The Corp)
>
> I will also "transfer" my interest in the commercial rental property
> to partner.
>
> The Bank holding the 1st & 2nd mortgage on the building/land (corp)
> has agreed to "remove" partner from
> mortgages.
>
> Private note holder for the commercial rental property has agreed to
> remove my name from that privately held note.
>
> I have an attorney that has drafted documents that will/would
> accomplish the above.
> In those documents there is no specific mention of capitol gains
> taxes, only that each partner will be responsible
> for any and all debts associated with this transaction.
>
> My question is:
>
> Does anyone know if the IRS will view these transactions as a buy/sell
> where by capitol gains, or for that matter, any other tax
> implication(s) may affect us at closing?
>
> Basically, we are removing my partners name from LLC and Corp, and I
> am removing my name from privately held mortgage on commercial
> property.
>
Seems to me you have taxable transactions here. Each of you will
receive certain assets and be relieved of certain liabilities, and
give up certain assets and assume certain liabilities. You may be
able to characterize at least some parts of the transaction as a like-
kind exchange, but it would have to be structured carefully to achieve
that, I think.
I'd strongly advise you to get competent tax advice before you
finalize the details of this transaction. The tax consequences to one
or both of you could affect the economics of the deal.
Katie in San Diego
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