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Report of the built-in capital gain of a LLC when converting from C-corp filing to Sch. C filing, due to change of ownership.

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last updated ‎December 07, 2019 8:41 AM

How to report the built-in capital gain from ownership of a real estate and its depreciation recapture when an LLC, that elected to be filed as a corp, applies to be taxed as a disregarded entity? 

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Level 14
last updated ‎December 07, 2019 8:41 AM

Assuming "an LLC, that elected to be filed as a corp, applies to be taxed as a disregarded entity? " is even possible this is a liquidation of the C Corp. All assets of the corp are deemed sold at FMV. C Corp reports the gain on the 1120.


ex-AllStar

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Level 14
last updated ‎December 07, 2019 8:41 AM

Assuming "an LLC, that elected to be filed as a corp, applies to be taxed as a disregarded entity? " is even possible this is a liquidation of the C Corp. All assets of the corp are deemed sold at FMV. C Corp reports the gain on the 1120.


ex-AllStar

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Highlighted
last updated ‎December 07, 2019 8:41 AM
The change is possible by filing Form 8832.
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Highlighted
last updated ‎December 07, 2019 8:41 AM
The change is possible by filing Form 8832.
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Level 15
last updated ‎December 07, 2019 8:41 AM

"...The change is possible by filing Form 8832"

Form 8832 is a one way street.  

Former Chump... umm.... AllStar.
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Highlighted
last updated ‎December 07, 2019 8:41 AM
It may be a two-way street: Following is an excerpt from the instruction of Form 8832. How do you think?

60-month limitation rule:
Once an eligible entity makes an election to
change its classification, the entity generally
cannot change its classification by election
again during the 60 months after the effective
date of the election. However, the IRS may
(by private letter ruling) permit the entity to
change its classification by election within the
60-month period if more than 50% of the
ownership interests in the entity, as of the
effective date of the election, are owned by
persons that did not own any interests in the
entity on the effective date or the filing date of
the entity’s prior election.
Note. The 60-month limitation does not apply
if the previous election was made by a newly
formed eligible entity and was effective on the
date of formation.
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Level 15
last updated ‎December 07, 2019 8:41 AM
A PLR is NOT inexpensive....AND there's no guarantee it'll work.
Former Chump... umm.... AllStar.
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Highlighted
last updated ‎December 07, 2019 8:41 AM
What is PLR?
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Level 15
last updated ‎December 07, 2019 8:41 AM
Private Letter Ruling. Read the instructions very carefully.

ex-AllStar
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