All Forum Posts by: Craig A.

 Thanks, Jay, we'll mention that to the advisor.

I live in Hillsboro, BTW, out by Helvetia Tavern. Many years ago, I lived in Lake Oswego. Stay dry. 😉

 This ship has sailed. 

Thank you very much. You folks lend phenomenal advice.

I called Vanguard, and they suggested we wire it into Dad's B of A savings account first because B of A is 'registered' with Vanguard; the originating send bank is small and is not. Once it has cleared at B of A we would then wire it over to Vanguard. We haven't decided where at Vanguard but are leaning toward the Cash Plus account.

I'm convinced, thanks to you, that he needs to have a FP, giving tax advice first and foremost, as well as what to do next. Vanguard charges 0.3% for that, Merrill Lynch 1%. My sister is with Merrill and has a positive impression. Is Merrill worth the extra money? My sister used to work at Vanguard and said they cut employees, and that service might be lacking. But when I called, I got right through. Advisors can be hit and miss, as with anything, but I wonder if a place like Merrill is somewhere that I should expect a step up, Vanguard being a low-cost company.

A 1031 is not possible, unfortunately. This was an LLC. He is not selling real estate, but rather a business interest. Dad was a minority owner, knows the others, and is sure the other owners won't want to transition into tenants in common, so he didn't ask.

My Dad is selling shares in a business and needs to know where to wire the proceeds. Rounding off, the amount is three million dollars. One million of it will need to go to taxes later. I told him to wire it into his money market account at Vanguard. He can decide later where to invest it for the long-term, and will likely do so in about a month. The money market account appears to be insured for $500,000, but I don't expect Vanguard to go bankrupt in a month. My dad was looking at the Vanguard "Cash Plus Account" that is insured for $2.5M.

Where should he wire this amount to? What would you do with this amount of money? Other than a B of A savings account that earns close to zero, Vanguard is currently the only place where he has an account that will handle this amount of money. Should it go to something other than a money market account or this Cash Plus account?

Another question:

This pertains to the above commercial property.

If a partner in an LLC dies, does the basis step up for a surviving spouse or other heirs?

How would the new basis be determined? Does an appraisal determine the new basis?

I should have asked this before.

Suppose we leave the partnership as an LLC and all agree to sell at a later date, meaning that we sell the entire property. Would my percentage then qualify for a 1031 exchange?

Let me run some numbers by you (anyone who is interested). What would you do? I'm 86-years-old (I could live ten more years). My health is currently pretty good, but not great. I have a wife and children - they would receive a stepped-up basis on my death. Business has been soft at the warehouse, but it is well-located, in good shape, and I expect business to perk up over the next five years. For "SELL LATER", below, I'm thinking that the family of the majority owner will want to sell when they receive a stepped-up basis upon the patriarch's death (this is a gamble on my part). He's 75-years-old, it could be twenty years. I/my family can afford to wait that long. I do not need the money right now, but who doesn't like cash, right? And I could find uses for the cash. He has offered to buy me out now, at the "SELL NOW" price. The "SELL NOW" price includes a 25% reduction from appraised value that applies to minority buyouts. 4% is a rough number for T-bills. The business is located in California and I live in Arizona. My share of current income on the business is $130,000, but I'm being conservative below, as a reduction is expected. This is an LLC.

SELL NOW proceeds:                                        $3,750,000

Less Tax (3,750,000 x 0.333)                              1,248,750

Net                                                                         2,501,250

Income after sale: (2,501,250 x 0.04)                   100,050

KEEP- then sell (IF the whole business is sold later)(in today's dollars)

Appraised value                                               $26,750,000

Minus debt                                                            5,003,000
Minus closing costs (7%)                                     1,872,500
Net on sale                                                          19,874,500

My share (22%)                                                     4,372,390

Less Tax on future sale (1031-ed or stepped-up basis) 0

Net                                                                           4,372,390
Income while holding (allowing for poor business performance) 75,000 to 100,000 annually
Income after sale (4,372,390 x .04)                                                                       174,895 annually

I want to hold onto it, but I'm receiving family advice to sell now. Bottom line though, what is best, by the numbers? I realize there is a lot you don't know about family dynamics, the location, market, etc. Assume this is a prime San Francisco Bay location. I'm taking votes, if anyone is game. SELL NOW? Or KEEP?😉

The title is held as an LLC. Why does that matter?

Thanks, guys. That aligns with what I've been told. You rock.

If I sell my 22% ownership of a warehouse to one of the other owners, does the sale qualify for a 1031 exchange? It has generated income for many years. The property itself is not being sold, just my percentage of it.