S corp LLC as sole owner of standard LLC for Long term buy n hold

[Timothy Howdeshell]

Hi BP,

I've read that there are potential issues with holding property long term in an S-corp LLC. My understanding is that any disposition of property out of the S corp triggers a taxable event, and steps up the basis thereby exposing the owner to capital gains tax.

I operate out of an S corp LLC now for short term real estate services (flips, agent services, etc.), but would like to place long term properties under a seperate LLC.

Would having the S corp LLC as the sole owner of the other LLC get around the above issue? Or would the property still be an asset of the S corp LLC, and subject to the same rules?

Thank you!