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Limited Partnership-Asset Transfer

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Dupahman

Guest
What is the name of your state? Florida

Hi, I am thinking about creating a LP for myself and would appreciate your help with an asset transfer question. If / When I create the LP, I plan to transfer my assets (including Stocks & Bonds) from my personal account to the LP. My question is do I RESET the stocks & Bonds Cost Basis to the price that they are on the date of the transfer or do I keep the Stock & Bonds "on the books" at the price that they were originally purchased? Thank you for your support,
Bob
 


abezon

Senior Member
How many people are in the LLP? Do you retain full control of the stocks? What do you hope to accomplish with an LLP?
 
D

Dupahman

Guest
Limited Partnership-Asset Transfer (purpose)

Thank you for your prompt reply Abezon, the purpose of the LP was for Estate Planning and Asset Protection purposes. The partners are family members (i.e. myself, my wife and son). I transfered all my stocks to the partnership and CONTROL (make buy / sell decisions) for the partnership. The question I have is, are the securities that were transfered to the parntership ReSet at the price that they traded on the day that the partnership was formed (i.e. that the securities were tranfered) or are they "on the books" on the partnership at the cost that I paid for them when I purchased them (before the partnership was formed / that they were transfered)? Thank you again for your help Abezon
 

abezon

Senior Member
So you & wife are general partners and son is the limited partner? If yes, then changing title on the broker account from 'me' to 'the me & my wife as general partners LLP' is not a taxable event, since you remain the owners of the stocks. Even if you owned the stocks personally, gifts between spice are not taxable. Therefore the LLP's basis would be the same as yours. The LLP will have to file a tax return and issue K-1's to the 3 partners, which they add to the appropriate places on their returns. You'll have to file a Schedule D for any sales that occurred prior to the LLP transfer.

Question: why did you decide that you needed/wanted an LLP and why did you choose to create one if you didn't fully understand how they work? Are you getting the full benefit of an LLP-enhanced estate plan, or is it just cool? Did an estate planner set this up for you or did you do it yourself with a self-help legal book? Mind you, I think self-help legal books are great for telling you *how* to do things; they're just not so great at helping you decide which of 7 options is the best for your situation. That's what the paid professionals do best. Assuming you can find one, of course. :) If your estate is large enough to require sophistocated tax planning, you should really spend a few hundred $$ and consult a professional, even if you do the drafting yourself.
 
D

Dupahman

Guest
Professional

Thank you again for your prompt reply Abezon, to answer the questions you asked:

"Why did you decide that you needed/wanted an LLP and why did you choose to create one if you didn't fully understand how they work". I worked with a friend of mine who is Tax Attorney and I thought I understood the concept. BTW, he is no longer "a friend" and I am considerably poorer for his "help"

"Are you getting the full benefit of an LLP-enhanced estate plan, or is it just cool?" No, I am NOT reaping any benefits from the LP and am going to see a CPA to check what else can be done.

"If your estate is large enough to require sophistocated tax planning, you should really spend a few hundred $$ and consult a professional, even if you do the drafting yourself."
I do NOT think that my Estate is "large enough" (it is in high 6 figures) but I thought that I would be ProActive and put myself ahead of the curve instead of reacting to the situation when it occurs. My legal "friend" did NOT charge me a few hundred dollars but charged me $300 an hour for 25 hours.

Thank you again for you help, I "learned" more from you in our email exchange than from my "friend". I assume that your are in the Legal profession so I won't make an Lawyer joles (which to me are NOT jokes but how I feel about most of the legal community)
 

abezon

Senior Member
If you & your wife's estates are likely to stay under $2M, a basic will with an AB trust would transfer the entire amount to your son tax free. If you don't want to deal with probate (public documents, some states base probate fees on the size of the probate estate), you can accomplish the same thing with a living trust.

Try the estate planning FAQ for more info, or consult a book at your local library.
 

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