Can Anyone Recommend A Tax Attorney?

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08/25/2021 Redacted Redacted

searcher University of Colorado at Boulder

CAN ANYONE RECOMMEND A TAX ATTORNEY?

Sole member LLC with negative retained earnings (has taken recourse debt over past few years, company has lost money) now wants to contribute LLC interests of company to a C Corp that will have other shareholders. What if anything can be done to minimize tax recapture?

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professional New York University Pennsylvania State University The Dickinson School of Law State University of New York at Albany - 08/25/2021

The recapture is just a recapture of the losses that the owners have taken. The owner could contribute capital in the amount of the losses, but other than that recognition will happen.

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professional Walsh College of Accountancy and Business Administration Davenport College of Business, Grand Rapids Detroit College of Business - Warren - 08/26/2021

I agree with Matt. This is a section 357(c) issue (liabilities are greater than tax basis of the assets being contributed) and can be hard if not impossible to avoid absent putting cash in to cover the deficit.

Not sure if there is a required reason for the C-Corp, but there would be alternative ways to avoid this issue by using a LLC taxed as a partnership. The partnership would need to be set up very specifically (to avoid traps) or you could have a similar issue but under a different

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admin Massachusetts Institute of Technology - MIT Sloan School of Management Taylor University Stanford University - Graduate School of Business - 08/26/2021

^[redacted]‌ - Thanks for posting! Tagging our accounting & legal communities who might be in a position to share some hard won wisdom with you here.

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CAN ANYONE RECOMMEND A TAX ATTORNEY?

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