Moving Assets From Old Entity To New Entity

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#1
Al723  
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Michigan, USA
This is probably a silly question but a client has an LLC. Him and his partner filed a final return for this entity since the minority partner was leaving. The remaining partner opens a new LLC with a new name and resumes business under this new LLC. He is now 100% shareholder and the assets for this business is the same as it was in the old entity. The remaining partner kept the land, building, FFE, etc.

How would I record the assets in the new LLC?
Do I add the assets at the net book value from when they terminated the original LLC and restart depreciation all over again?

Can I add the original purchase price and accumulated depreciation and use the remaining life of the asset as shown in the original fixed asset report?

Do after debiting the assets, do I credit capital contributions so the balance sheet balances?
Is the process different if this was an S Corp?
What is the best practice for my client?

Thanks for your help.
 

#2
Doug M  
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Oregon
Not following the whole story, don't think I need to. I would carry the assets (and any liabilities) using the tax basis of these assets on the balance sheet.

Look at example 1 in this article to help you determine the tax basis in real property distributed.

I think you now have an SMLLC, which is a disregarded entity. You will be filing future income and expenses on Schedule E. I would credit owners equity.

https://www.thetaxadviser.com/issues/20 ... f-llc.html
 

#3
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We did this at a prior firm I worked for, although it was partnership / C Corp instead of partnership / DRE.

Transferred assets at net tax basis, restart depreciation life in new entity on date of transfer. Don't ask for any authoritative support. Back then I just did what I was told. :)
 

#4
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I think the asset basis and holding periods carryover to the new entity.

So if you bought a building in 1999 for $1 million and now you have $475k of accumulated depreciation on the old LLC books, both those numbers come over to your new LLC book. You do not put the net asset on the books and ignore prior depreciation and holding periods.
 


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