Hey guys,
I have a client that has a FLLP with his 2 kids. He has an outside property that he wants to contribute to the FLLP and then his basis and interest would increase, then take this LP interest and exchange it for a satisfaction of debt with his two kids. He currently has 2 outstanding loans with his kids that we have been calculating interest and have a written agreement for.
My question is, the loans are outside of the FLLP so, wouldn't this just be "siloed?' For example he can gift the interest for his kids but then the kids will just forgive the debt so the tax consequences will be the gifting and the COD? Some guidance on this would be great!
Any research or other points would be great! Thank you!