Tax Law (Questions About Taxes)/Offsetting Capital Gains



Thank you for taking the time to answer this question. My LLC which owns a operates rental properties has sold a piece of property with around $140K gain. We have put the money in a 1031 exchange to hopefully find a replacement property.

If a replacement property is unable to be obtained, the bushiness  will incur a 15% capital gains tax on this amount for about $21K. Is there anyway to offset this gain with business losses? Purchasing a business vehicle? Capital improvements to properties within the bushiness? Other ways I may not have thought of?

If there is no way to offset this gain, I may look more closely at purchasing properties in the 1031 exchange to offset this gain, even though the properties I am finding may not be as desirable as they could be. So any help on this matter would be much appreciated!

Capital gains cannot be offset by business losses.

I would reconsider.

Buying into a less than stellar property, just to postpone the cap gains tax, may not be prudent.

You are only postponing the tax. What happens next time? what happens when you do finally sell for cash? And you'd be in an underperforming asset for that?

Historically, the 15% Cap gain rate is very low. Do you think taxes will go up, go down or remain the same in the future? Many experts would say that the likelihood is that taxes will increase.

Do you want to avoid paying 15% now so you can pay 20, 25, 30% or more later?

And here is the sleeper problem with the 1032 exchange. You must roll over your old basis to the new property. Your depreciation on the new property will be severely hampered.

Since the sale is already done, some less well known solutions are no longer available to you.

Give me a call and I'll explain any of these points you are not sure of.


Tax Law (Questions About Taxes)

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Richard Fritzler


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.


I have been in the business of assisting business owners in reducing their taxes and liability since 1986.

National Small Business Owners Association.
Contributing author to "The Corporate Standard Newsletter".

Contributing author to "The Corporate Standard Newsletter".

I have been in the business of assisting business owners in reducing their taxes and liability since 1986.

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