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Tax Law (Questions About Taxes)/Corp income tax
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Question
An S Corp buys a foreclosed property in March for $100.000. In June it sells the property to a private individual for $150.000. Immediately after quitclaim deeds it back to the S Corp.
In other words the corporation uses the individual’s credit to refinance the property.
Is the corporation responsible for paying income tax for the $50.0000 it got from the bank by selling(refinancing) the property?
In a vacuum, the answer is yes, the corporation pays the taxes on the gain at income tax rates. However. . .
You would be unsuccessful at quit claiming the property to the corporation. You forgot about the lender. who can, and would, refuse to allow the transfer. You will also find the lender has a clause in the mortgage that would require repayment of all the money immediately if the property is sold or transferred.
Richard Fritzler
http://www.owelesstax.com
http://www.nevadacorporateservices.com
phone 800 590-6612
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Answers by Expert:
- Rod Dorothy
- Helen P. O`Planick, EA
- Carole Dunton
- Randall Brody, EA, MBA
- Mike Wellman
- Richard Fritzler
- Vanessa D. Powell, CPA
- MEdusa
- Glenn D Schnabel
- IJ Zemelman, EA MBA
- John L. Tidwell
- John Stancil, CPA
- Neil Johnson (The Tax Dude®)
- Adam Shay
- Edward L Parsons CPA
- Bruce W. Tyler, EA
- Chea Romine, CPA
- ABRAHAM ITANI, CPA
- WILLIAM D MCCONNAUGHY, CPA
- Jay Allen Finn, CPA
- Mark Trazo, CPA Candidate
- Randall Klein, MBA, EA
Richard Fritzler
Expertise
Specializing in Business and Corporate taxation. Comparing the advantages and requirements of different business entities, such as Sub-S Corporations, LLC`s, Partnerships (Both Limited and General), Doing Business as a Sole Proprietor, or Using a C-Corporation. Issues regarding K-1 distributions, 1040, schedule C, 1120, 1120s. Are you considering domiciling a Corporation in a low tax state? I can review the benefits and misinformation that exists.
Experience
I have been in the business of assisting business owners in reducing their taxes and liability since 1986. The company is Owelesstax, incorporated, at www.owelesstax.com
Organizations
National Small Business Owners Association.
Publications
Contributing author to "The Corporate Standard Newsletter".
Publications
Contributing author to "The Corporate Standard Newsletter".
Ezinearticles.com
articlesbase.com
Education/Credentials
I have been in the business of assisting business owners in reducing their taxes and liability since 1986. The company is Owelesstax, incorporated, at www.owelesstax.com
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