If a taxpayer has a single member LLC which owns a rental property as its only asset, and has been reporting income and expenses on Schedule E (ie, for tax purposes, disregarding the LLC), what is tax consequence, if any, of terminating the LLC and distributing the rental property to the LLC owner?
Single member LLC distributing only asset
Sep 29, 2010
3 Replies
None. A single-owner LLC is a disregarded entity.
(A multi-owner LLC is a partnership, unless the sole owners are husband and wife in a community-property state.)
You still have to file form 4797 for the disposition of assets. You may owe tax due to depreciation recapture. I think you have to buy the assets from yourself at FMV.
Not so. Transactions between a disregarded entity and its owner have no tax impact.
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