jim@lwr

There are private letter rulings (LTR 200807005 for example) that allow for replacement property to be held by disregarded entities. So the fact that title to the replacement property is in the name of a disregarded LLC is not necessarily a problem. If the LLC was not owned by the S Corporation at the time of the exchange, that may be a problem, but not necessarily. In the letter ruling the taxpayer wanted to acquire as the replacement 100% of the partners' interest in a partnership that owned the property, and that was deemed a good exchange. I would caution against dissolving the corporation without careful research. There will be a deemed sale of the property at fair market value upon liquidation and gain or loss recognized by the corporation and taxed to the shareholder, and it will do nothing to cure a failed exchange, if that is the case.

The corporation, not the shareholders, will be the exchanger in the 1031 transaction. Do the bylaws require 100% shareholder approval? After the exchange, then what? You still have a C corporation owning low basis real estate. With LLPs as shareholders does the corporation even qualify for an S election? Since there is no corporate level capital gains rate, the option to sell stock at $2.5 might seem more attractive.

Divide the net figure by 97% (which is 100% - 3%) $184.30 divided by 97% = $190.00. Proof: $190.00 X 3% = $5.70; $190.00 - $5.70 = $184.30

PapaJoe, I am not convinced that you were wrong under the circumstances you outlined above. It seems to me that the 1999 replacement is considered a separate structure and as RoyDaleOne says there would be no write off of the roof component of the original structure. But if the 1999 roof fails and you have to replace it then you are not dealing with a component of a structure, rather you are dealing with the separate structure you set up in 1999. Accordingly, you should write off the unrecovered cost of the 1999 roof.

Thank you, George. With all of Walgreens resources, I thought they couldn't possibly be wrong, but I agree with you that they are. I understand that you can accrue an expense...but to "accrue a payment" makes no sense to me.

A client received a 1099-Misc from Walgreens reporting 13 months payments. A letter separately sent explained that "For 2007, we switched from a cash-basis to an accrual-basis method of reporting rental income payments, as permitted by the rules and regulations of the IRS. Consequently, this Form 1099-MISC includes 13 months of rental income, the 12 payments for 2007 plus the January 2008 payment. From a tax payment perspective, the inclusion of the January 2008 rental income on your 2007 Form 1099-MISC should not accelerate the payment of tax. The tax on the amount reported to you as January 2008 rental income must be paid in April 2008 regardless of whether it is included in your 2007 income tax return or in your 2008 estimated quarterly tax payment." Has anyone ever heard of the "rules and regulations" that allow the reporting of payments on an accural basis? Thanks for your help.

Isn't there another tax due that no one has talked about? If the shareholder received a home that is worth $250,000 and only paid $200,000 doesn't he have a dividend of $50,000?