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How to Provide Individual Investment Options for Multiple Stakeholders in an LLC

Limited liability companies (LLCs) have been a preferred business entity among multiple stakeholders since the 1980s.

Many legacy Limited Liability Corporations were formed by family members to pool funds to invest in commercial real estate. Perhaps the most famous example is Walton Enterprises LLC, the Limited Liability Company founded to serve the beneficiaries of Walmart founders Sam and Helen Walton. Most family trusts and business partnerships won’t reach those same lofty heights, but they still remain a useful tool for members to make larger capital investments than they could as solo investors.

Can I 1031 Into A Qualified Opportunity Zone?

The 26 U.S. Code § 1031 - “Exchange of real property held for productive use or investment,” aka the “1031 Exchange,” aka the “like-kind exchange” has been around for close to a century. Originally initiated as a tool to help farmers better understand land borders, the code allows investors to defer real estate capital gains taxes, by allowing them to “exchange” property into other like-kind investments.

Meanwhile, the Qualified Opportunity Zone Program (QOZP) was passed as part of the Tax Cuts and Jobs Act of 2017. The program’s purpose is to encourage investment of capital gains from the sale of assets into federally designated lower-income communities. 

1031 Exchange On A Primary Residence

The basics of the 26 U.S. Code §1031 “Exchange of Real Property Held for Productive Use or Investment” are that you can exchange any real property “held for productive use in a trade or business” into another such real property, and defer capital gains taxes on that exchange.

How Many Retirement Plans Are There?

The sooner you prepare for retirement, the better. In fact, the recommendation is to begin saving as soon as you earn an income. 

Does that mean if you haven’t gotten a jump start on saving that you won’t be able to have a comfortable retirement? Absolutely not. 

There are so many retirement plans, all with different drawbacks and benefits depending on your age and financial situation. In fact, The Internal Revenue Service (IRS) lists 14 types of retirement plans. 

What Is The Purpose Of A Delaware Statutory Trust?

The small state of Delaware is a financial haven for corporations and investors due to many of its friendly ordinances. Delaware offers advantageous conditions to companies that incorporate there, including privacy and lower taxes than many other states. Delaware is also one of the few states in America with statutory trust law, in contrast to states using common law trusts. Delaware adopted the Delaware Business Trust Act in 1988 (and changed the name in 2002 to the Delaware Statutory Trust Act).

Mortgage Forbearance And Eviction Moratoriums

With the shutting down of the economy due to COVID-19, many tenants are without a job, which means they also can’t pay their rent. For landlords, this means a significant cut in property cash flow. However, because cash flows have been reduced doesn’t mean expenses have also been reduced. With active tenants on the property, expenses are likely to remain at previous levels. How do landlords survive in this type of situation?

Real Estate Strategies And Risk Levels

The phrase “don’t put all your eggs in one basket” applies to real estate, the level of risk exposure, and your investment strategy. There are numerous ways investors can diversify their real estate investment portfolio to potentially minimize risk exposure. 

What Is the Time Frame To Identify A Like-Kind Property?

In a 1031 exchange, there is a specific time frame to identify a like-kind property that will replace the relinquished investment. 

An investor must identify a like-kind property to a Qualified Intermediary within 45 calendar days from the close of the relinquished investment. 

How Does A 1031 Exchange Affect The Seller?

Experts pay a great deal of attention to the taxpayer's actions required for completing a Section 1031 exchange. Less advice is available to the investor selling property as the replacement asset in that 1031 exchange transaction. However, the seller should be aware of some deadlines and potential “bumps in the road” as well.

What Is A Forward 1031 Exchange?

A forward 1031 exchange completes the close on the relinquished property before acquiring the replacement property. This method and a simultaneous 1031 exchange, where both properties are closed at the same time, are the two most common 1031 exchange methods (the third is a reverse 1031 exchange). A forward 1031 exchange is also sometimes called a “Like-Kind Exchange,” “Starker Exchange,” or “Delayed Exchange.”

All the 1031 exchange deadlines and rules still apply with a forward 1031 exchange. A qualified intermediary (QI) has the same role in a forward 1031 exchange as in other 1031 exchanges. As with the other 1031 exchanges, a forward 1031 includes the same great tax deferral benefits.