[WSBAPT] Real estate excise tax issue/inheritance

[Marcus Fry]

Two brothers (A and B) are to inherit equally the entire ownership in LLC, which owns a single building (say building has fair value of $1million).  There are no other assets in the estate.  Brother A offers instead of the estate distributing his 50% to him, he will sell to Brother B.  Per WAC 458-61a-101(4)(c), this is a taxable event due to controlling interest and the selling price is $1 million, the full fair value of the building.  Anyone disagree?  If agreed, if LLC first distributes real estate to Brothers A and B to hold as tenants in common and then A sells his 50% interest in the real estate to B, the excise tax is at the sales price ($500k), correct?   Anything wrong with the PR making the distribution first from the LLC to avoid the imposition of the higher excise tax?

Marcus J. Fry
Lyon, Weigand & Gustafson, P.S.
P.O. Box 1689
Yakima, Washington  98907
Telephone:  (509) 248-7220
Facsimile:  (509) 575-1883

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