QUESTION
Can a LLC purchase assets from another LLC and not be taxed on the transaction?
Asked on Jan 28th, 2012 on Business Law - Ohio
More details to this question:
I am buying a 1/3 share of a LLC. Previously the LLC was single member owned. The owner has debts that I do not want to be party to. Is there a way for us to create a newly formed LLC with both of us a members, buy the assets from the previous LLC and leave the debt that the is owed in the LLC that he fully controls and manages, without being taxed on this transaction?
If not, is there a way for the newly formed LLC to buy in full the single member LLC without being taxed on the transaction( this would be for other reasons)?
What would these transactions entail?
1 ANSWER
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There is never an income tax imposed on the buyer in such a transaction. The issue is whether the seller will be liable for tax on the gain on the sale of the assets sold. That depends entirely on the relationship between the purchase price of the assets and the seller's basis.
Answered on Jan 29th, 2012 at 11:25 AM