S Corp shareholder owns land. S Corp shareholder owns 80% of the S Corp stock and family members own rest. S Corp will rent land from 80% shareholder with a 20 year lease. S Corp will construct a building on the land with its own funds and will own the building and will pay a fmv rent to the landlord.
What happens at the end of the 20 year term? Is it income to the landlord if the building reverts to the landlord? Assume the lease is structured in a way such that the construction of the building is not in lieu of paying rent.
If the S Corp was an unrelated party the S Corp would claim an abandonment loss and the landlord would not have taxable gain but what about in this case? Are there any related party rules barring this same treatment?
What happens if S Corp Shareholder dies? Is a step up available for the building and land or just the land? See case below?
https://law.justia.com/cases/federal/ap ... 60/224518/
https://www.plantemoran.com/explore-our ... provements
https://www.colliers.com/en/news/housto ... provements
viewtopic.php?f=8&t=18179&p=158615&hilit=lease+tenant#p158615