commercial property in trust?

Question

We have a commercial property under S-corp and we are preparing our trust. For tax purpose such as capital gain in future acquisiton, is it better to have the commercial property title under trust or just leave it under s-corp. thanks

Answer 1

The best thing is to do both. Just leave it in the S corp and transfer the S corp to your trust. That avoids any taxes for distributing from the S corp and avoids probate when you die.

Answer 2

Serge is correct that there is not enough information here.

That being said, distributions of property from an S corporation are treated as a sale by the corporation at FMV. Any gain will flow-through to the shareholders.

If the property is appreciated, you may be looking at a very large taxable gain just for transferring the title.

Answer 3

Impossible to answer without looking at your total situation. Your trust attorney should advise you. Whatever answer you get here is irrelevant because the person answering does not have enough facts about you and your finances.