NASSAUSUFFOLK

This message has been cross posted to the following Discussions: Federal Tax and NASSAUSUFFOLK .
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Hi, I have a client that had a real estate holding in an S-Corp which they sold on installment 15 years. The property was located in NYC and is subject to NYC corporate tax on the gain of the sale which I am trying to save them by transferring this to the personal level which I believe the election is allowed to be taken within 13 months of the sale.


I am looking for information on if it is possible to amend the corporation that was filed 2 years ago and elect to transfer an installment sale out of an 1120S corporation to the personal level (I know it is past that period now but is there any way to amend the return to reflect this) I also do not know exactly how I would structure this.

What I am looking for information on is if anyone has experience performing this and what steps are involved (for future use) and for past use.

Thanks

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Gus Hatzistefanidis
CPA
KOSTAS HATZISTEFANIDIS, CPA
Astoria NY
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Gus: You cannot transfer the installment obligation out, without triggering a taxable event. By doing so, in effect, you are accelerating the entire gain, as the shareholders would be taxed on the difference between the fair market value of what the receive and their adjusted basis. ------------------------------------------- Robert Brown ROBERT N. BROWN, CPA Jericho NY -------------------------------------------
Original Message: Sent: 03-27-2014 12:44 From: Gus Hatzistefanidis Subject: TRANSFER INSTALLMENT SALE OUT OF SUB S CORP This message has been cross posted to the following Discussions: Federal Tax and NASSAUSUFFOLK . ------------------------------------------- Hi, I have a client that had a real estate holding in an S-Corp which they sold on installment 15 years. The property was located in NYC and is subject to NYC corporate tax on the gain of the sale which I am trying to save them by transferring this to the personal level which I believe the election is allowed to be taken within 13 months of the sale. I am looking for information on if it is possible to amend the corporation that was filed 2 years ago and elect to transfer an installment sale out of an 1120S corporation to the personal level (I know it is past that period now but is there any way to amend the return to reflect this) I also do not know exactly how I would structure this. What I am looking for information on is if anyone has experience performing this and what steps are involved (for future use) and for past use. Thanks ------------------------------------------- Gus Hatzistefanidis CPA KOSTAS HATZISTEFANIDIS, CPA Astoria NY -------------------------------------------

Robert,

Thanks for your thoughtful insight, I understand your point completely. I made a mistake below as to the rule name, I was just wondering under the 12-month rule, Section 453B(h), says that the gain on distribution of an installment obligation is not triggered by liquidation of an S corporation if the requirements of the first special rule Section 453(h) which states the shareholder is not taxed if the installment sale is a result of the liquidation of corporate assets within 12 months.

Your thoughts on the application of the above rule? Thanks again for your response!

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Gus Hatzistefanidis
CPA
KOSTAS HATZISTEFANIDIS, CPA
Astoria NY
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Original Message:
Sent: 03-28-2014 18:58
From: Robert Brown
Subject: TRANSFER INSTALLMENT SALE OUT OF SUB S CORP


Gus:

You cannot transfer the installment obligation out, without triggering a taxable event. By doing so, in effect, you are accelerating the entire gain, as the shareholders would be taxed on the difference between the fair market value of what the receive and their adjusted basis.
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Robert Brown
ROBERT N. BROWN, CPA
Jericho NY
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Gus: The rules of 453B state that no gain is recognized by the corporation. The shareholder will recognize gain to the extent that installment obligation exceeds their basis. In some cases, depending on the shareholders situation, it pays to liquidate before the installment obligation is paid. Robert ------------------------------------------- Robert Brown ROBERT N. BROWN, CPA Jericho NY -------------------------------------------
Original Message: Sent: 03-29-2014 23:29 From: Gus Hatzistefanidis Subject: TRANSFER INSTALLMENT SALE OUT OF SUB S CORP Robert, Thanks for your thoughtful insight, I understand your point completely. I made a mistake below as to the rule name, I was just wondering under the 12-month rule, Section 453B(h), says that the gain on distribution of an installment obligation is not triggered by liquidation of an S corporation if the requirements of the first special rule Section 453(h) which states the shareholder is not taxed if the installment sale is a result of the liquidation of corporate assets within 12 months. Your thoughts on the application of the above rule? Thanks again for your response! ------------------------------------------- Gus Hatzistefanidis CPA KOSTAS HATZISTEFANIDIS, CPA Astoria NY -------------------------------------------
Original Message: Sent: 03-28-2014 18:58 From: Robert Brown Subject: TRANSFER INSTALLMENT SALE OUT OF SUB S CORP Gus: You cannot transfer the installment obligation out, without triggering a taxable event. By doing so, in effect, you are accelerating the entire gain, as the shareholders would be taxed on the difference between the fair market value of what the receive and their adjusted basis. ------------------------------------------- Robert Brown ROBERT N. BROWN, CPA Jericho NY -------------------------------------------