A father and son have asked me to assist them with an exchange of membership interests. They each own 50% of the membership interests in two separate LLCs. They intend to exchange LLC interests so that the father will own 100% of restaurant A and the son will own 100% of Restaurant B. Both entities file under Subchapter S.
I believe that a direct exchange like this automatically qualifies for like-kind exchange treatment, but I am wanting to make sure I am not missing anything or if there is any special or extra documentation we need to complete to make the exchange tax-free. They tell me that restaurant A is probably a little more valuable/profitable than restaurant B, but even so there will be no cash payment or “boot” to equal out the exchange values.