[WSBARP] Excise Tax

[J Richard McEntee, Jr.]

Hello -

A client called related to an LLC ownership transfer. The LLC is in the business of developing real estate and as such owns a particular parcel upon which it is constructing and managing multi-family housing. The LLC has three members: two own 25% each and one owns 50%. The 50% owner lives out of state and wants to sell his interest in the LLC.  There are two other investors who would like to purchase the 50% members interest in the LLC. Each would own 25%. The prospective purchasers know each other and have invested in other similar ventures.


As to the tax, it is my understanding is that excise tax is probably due for the transfer of the 50% ownership. I think that the only way to avoid the tax would be if the purchasers are not acting in concert as to their purchases. Am I correct in my understanding of the regulations? If so, how difficult is it to prove that the purchasers are not acting in concert? 

Thank you, in advance, for your feedback.
Rich  


RICH McENTEE
McENTEE LAW OFFICE
3800 Bridgeport Way W, Ste A411
University Place, WA 98466
253.227.9894(m)
jrmcentee at gmail.com       

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