Q: I am exchanging property in a 1031 “like-kind-exchange.” Can I exchange my one property for more than one property.
A: Yes. As long as the property being exchanged is within the same class, you may exchange the property for more than one property. When dealing with real estate, you can exchange one property for up to 3 properties.
Q: I just opened a business and formed it as a Limited Liability Company under my state’s laws. For federal tax purposes, how do I classify my LLC?
A: An LLC may be classified for federal tax purposes as a sole proprietorship, a partnership, or a corporation. If the LLC has only one owner, the LLC will automatically be treated as a sole proprietorship unless another election is made by the owner. On the other hand, if the LLC has two or more owners, it will be classified as a partnership unless an election is made. The election is made on IRS Form 8832. Unless the election is made, the classification will be the default classifications.
Q: My business is in arrears on its payments. What is my best course of action?
A: There is no one standard answer for this situation. With that said, generally it is best to not ignore the obligations which you may be in default on. Calling the creditor, being forthright, and knowing your rights are tantamount to survival and recovery in the process. If a creditor does not know you’re willing to work with them, they have no choice but to pursue other legal options against you.
By: Basi & Basi at the Center for Financial, Legal and Tax Planning for Transworld M&A Advisors