Posted by E.Eka on October 22, 2003 at 14:49:03:
You’re right! In other words, the fair market value of the asset has to be lower than the carrying value of the asset.
Purchasing property from my corporation - Posted by Chris
Posted by Chris on October 22, 2003 at 11:36:14:
My corporation own a property that I was going to flip but have decided to keep as a rental. I want to transfer title in my own name. My question is, can I purchase the property from my corp for some amount less than my corp paid for it and show it as a loss on my corp taxes?
Yes… - Posted by Jim (MD)
Posted by Jim (MD) on October 22, 2003 at 13:41:07:
if you can justify that the property has gone down in value.
Re: Yes… - Posted by E.Eka
Posted by E.Eka on October 22, 2003 at 14:20:31:
Don’t ask me to go into this further but (because someone will read this and expect me to cite the law, code or regs which I don’t do for free):
The IRS will treat that transaction differently because it’s a related party transaction. Because you are a related party to the seller, you’ll have the SAME basis as the seller so that no loss is recognized. Think about it, if you could recognize a loss on a transaction like that, how many people do you think would go out and buy property and sell it to themselves at a loss so that they can benefit from the loss? The IRS realized that so you can’t do that.
Now if the asset actually drops in value, that may be a different matter. Go talk to you accountant before you make tax decisions that will impact your pocket book.
Just my two cents.
it is good to see that you agree with me… - Posted by Jim (MD)
Posted by Jim (MD) on October 22, 2003 at 14:42:42:
and I can see that you agree with your words “if the asset actually drops in value”.
What we are both saying is correct, however it would be nice to have more information to have further discussion.