BHoffman Posted February 18, 2017 Report Share Posted February 18, 2017 Inc.A started out as a C-Corp. The C-Corp was a partner in a partnership. The partnership held Land as an investment. On 01/01/2013, Inc. A made an S-election. On 12/31/13, the partnership terminated and distributed the Land to Inc. A. If Inc. A sells the Land in 2016, is the gain subject to the build-in gains tax? I'm thinking it is not because Inc. A owned only a partnership interest while a C-Corp and not the actual Land. It acquired the Land while an S-Corp - when the partnership terminated and made the distribution. Am I on the right track? Quote Link to comment Share on other sites More sharing options...
DANRVAN Posted February 18, 2017 Report Share Posted February 18, 2017 I believe there is a BIG on the partnership interest that will be recognized when the land is sold. In the case of "The Ringgold Telephone Company v. Commissioner (T.C. Memo. 2010-103)" the question was not whether there was a BIG from the partnership interest held at the time of conversion. The argument was over the valuation of the partnership interest. Both parties agreed there was BIG. 1 Quote Link to comment Share on other sites More sharing options...
jklcpa Posted February 18, 2017 Report Share Posted February 18, 2017 I didn't research but I think there is a BIG also. The partner is considered to own the underlying assets of the partnership, and when the corp made that S election, it became the "owner" of that land that was later distributed to it. I think the sec that covers it might be 751, but don't hold me to that for sure. I'd have to look up to verify the reference. 1 Quote Link to comment Share on other sites More sharing options...
BHoffman Posted February 18, 2017 Author Report Share Posted February 18, 2017 OK. Just to be sure: The SCorp acquired the land on 12/31/13 and in order to avoid the BIG tax, it should wait 5 years until after 12/31/18 to sell. Right? 1 Quote Link to comment Share on other sites More sharing options...
BHoffman Posted February 19, 2017 Author Report Share Posted February 19, 2017 Yes. The PATH Act permanently reduced the BIG holding period from 10 to 5 years. 1 Quote Link to comment Share on other sites More sharing options...
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