Distribute wholly owned subsidiary to LLC member

Technical topics regarding tax preparation.
#1
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I am having trouble finding information on this and think I may just be over complicating things. LLC A is taxed as a partnership is owned by three members. LLC A wholly owns another LLC. LLC B. They are wanting to distirbute LLC B to one of the members of LLC A. The member that is receiving it is wanting to take on the work that B is doing and the other member do not really care to be involved with it any more.

Would it just be treated as a normal property distribution? I thought it would be more involved than that but I am having trouble finding any info on this for some reason.
 

#2
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Normal property distribution is correct, that is the beauty of partnerships. Is there something unusual about LLCB that is causing concern, for example, are the assets and liabilities significant? Or is LLC B not disregarded? One issue that might arise is if there are liabilities that are coming out with the distribution, whereby all the partners in LLC A are deemed to be receiving a distribution ( which could be taxable depending on the facts).
 

#3
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Nothing particularly special. The other members I believe would not be receiving a distribution when LLC B is distributed out though.
 

#4
lckent  
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Distributions do not have to be equal, as long as per operating agreement and have substantial economic effect. If LLC B is DRE, then, for tax purposes, you are really distributing the underlying assets. May have Sec 751 "hot" assets to deal with and may have gain and/or basis allocation issues.
CPA, Retired
 

#5
Nilodop  
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Is the member who receives the distribution giving up anything in return? If so, what?
 

#6
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He is not giving up anything. He is simply receiving LLC B to continue running it because the other members of LLC A do not want to do anything with it anymore.
 

#7
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Is the member who receives the distribution giving up anything in return? If so, what?


I was wondering the same thing
 

#8
Nilodop  
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Is the distribution valuable or of negative value, and what are the assets and liabilities being distributed and what is their basis? In other words, what are the facts? Jeff-O won't steer you wrong.
 

#9
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I was wondering the same thing - What kind of assets are we talking about? What’s the tax basis?
 


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