All Forum Posts by: Blake Johnson

@Blake Johnson If investors want to divide real estate holdings without triggering a large tax bill, the biggest challenge is that transferring assets out of a corporation is typically treated as a taxable sale at fair market value. To minimize taxes, consider the following strategies:

1031 Exchange Before Dissolution – The corporation could complete a like-kind exchange, allowing investors to roll their ownership into individual properties while deferring capital gains tax. This requires careful structuring and compliance with IRS rules.
Installment Sales or Buyouts – Instead of distributing properties outright, investors can sell or buy out their respective shares over time, spreading out tax liability and reducing immediate capital gains impact.
LLC Restructuring (State-Specific) – Converting the corporation into an LLC taxed as a partnership may allow for a more tax-efficient asset distribution. However, corporate conversions can still trigger taxes, especially if the properties have appreciated significantly.
Corporate Spin-Offs (If Eligible) – A Section 355 tax-free spin-off could separate real estate holdings into multiple entities owned by different investors. This strategy requires strict compliance with IRS rules and may not be practical for all situations.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

This was very insightful and I will look into the options a bit further. Number 4 sounds promising. Thank you!

0 Votes

Kansas City, Missouri

It sounds like you have a great cash flowing property with a cap rate of about 16-17%. I would not be in any hurry to sell this property. It is unfortunate that your lender is not willing to cash out or provide heloc, I'm curious what you mean the price is too low? Have you shopped around for other lenders? I do agree with @Jules Aton though, the best option may be to wait and save up for your down payment. Also I am assuming from the title of the post that if you were to sell the property you would be doing a 1031 to defer the taxes?

0 Votes

Chicago, Illinois

@Chris Seveney basically treating it as a sale of assets and having to pay capital gains. Each investor would still choose their preferred properties and the corporation would liquidate enough to pay taxes. Seems like such a waste but nobody can agree on a new portfolio manager as the old manager was a family friend for multiple generations and well trusted. Not sure where to find a trustworthy manger.

0 Votes

Kansas City, Missouri

I was wondering if anyone had advice on how to divide assets among investors without having to sell the properties and pay taxes. Currently a corporation owns a portfolio of properties and the investors are looking to dissolve the corporation and divide the assets amongst each other based on share value. My current line of thinking: Is it possible to just "transfer" the properties to LLCs owned by the individual investors and not consider it a sale?
Any advice on how to split the assets would be greatly appreciated!

0 Votes

Kansas City, Missouri

All Forum Posts by: Blake Johnson

Blake Johnson has started 1 posts and replied 4 times.

Post: Division of assets

Post: sell the house to exchange it for a multifamily or keep it as rental

Post: Division of assets

Post: Division of assets