ROBS funded business acquisitions with real estate component

by a searcher from Yale University - School of Management

May 05,2023

Oftentimes, small business owners who also happen to own the real estate on which their business operates will set up a separate legal entity to own the real estate (the "RealPropertyCo") for a variety of reasons.  The operating company (the "OpCo") will then lease the real estate from the RealPropertyCo.  

Since the RealPropertyCo and the OpCo have common ownership, the lease is considered a related party / affiliate transaction.  My understanding is that under the rules governing ROBS-funded transactions, these sorts of related party / affiliate transactions are not allowed.  

QUESTION:  What are some ROBS-compliant and tax-efficient structures that folks have used when purchasing businesses together with their real estate holdings?  

Thanks in advance for your thoughts / input.

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searcher from University of Illinois at Urbana-Champaign

Hi Armando - I don't have an answer, but Alex Gardine is an attorney that I consulted with while getting familiar with ROBS. He is who I was referred to by Guidant Financial. Just sharing his contact info in case it helps. https://www.southernutahtaxattorney.com/

05/07/2023 | like reply | 0 likes

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