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Subject:  Re: Payments On UnOwned Property Date:  10/2/2013  2:31 PM
Author:  ptheland Number:  119250 of 131759

Did the LLC own the property?

Yes. Technically, the gift was of a company and not a property.

OK. Now things are starting to come together in my mind.

When you wife made a gift of the LLC to your son (it was your son, wasn't it?), that did not affect the property records with the county. The ownership of the property never changed. The LLC owned the property throughout this whole process.

It's kind of like Ford Motor Company stock. Ford owns lots of real estate. There is no need to change the real estate records with the county every time someone buys or sells a share of Ford stock. Ford owns the real estate no matter who owns Ford.

So there is no reason to even look at the county records. The LLC owned the property before the gift, and the LLC continued to own the property after the gift.

It appears that after you made the gift of the LLC, your son chose to dissolve the LLC and transfer the property into his name. That is when the county recorder will have something to record.

Now let's apply this information to your question regarding expenses.

Who owned the bank account where the expenses were paid from? It should be the LLC. So when the LLC was transferred to your son, he effectively got control of both the real estate and the bank account. Therefore any expenses paid out of that account after the gift of the LLC would be his expenses to deduct and not yours. Ditto for any rental income deposited into that account.

This leaves a couple of open questions in my mind.

Assuming the LLC owned the bank account, did you include the bank balance as part of the value of the gift on your gift tax return? If not, an amendment might be in order.

Still assuming the LLC owned the bank account, did your wife take money out of that account after the gift? That would be a gift from you son back to your wife. And if large enough, he might need to file a gift tax return.

Did the LLC own anything else? How about any money your property manager might have been holding?

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