re-phrase real estate question - Spidell

re-phrase real estate question

Log in to Post

Message Board re-phrase real estate question

This topic contains 0 replies, has 1 voice, and was last updated by Anonymous 2 months, 2 weeks ago.

  • Author
    Posts
  • #170749
    Anonymous

    <div><span style=”font-size: 11pt;”>Father and son are 50/50 limited partners in a real estate LLC.  <span style=”color: #000000; font-family: ‘Segoe UI’, ‘Lucida Sans’, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: #fafafa; text-decoration-style: initial; text-decoration-color: initial; float: none; display: inline !important;”>The original mortgage was $3.5M. The new mortgage is $7M. Consequently,  they had an additional $3.5M cash out above our mortgage account. </span></span>
    <div style=”clear: both;”></div>
    </div>
    <div><span style=”color: #000000; font-family: ‘Segoe UI’, ‘Lucida Sans’, sans-serif; font-size: 11pt; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: #fafafa; text-decoration-style: initial; text-decoration-color: initial; float: none; display: inline !important;”>Before the cash out each partner had an ending capital account of $1.1 million (total $2.2 million) and each partners’s share of liabilities (non recourse debt) was $1.7 million (total of $3.4 million)</span></div>
    <div></div>
    <div><span style=”font-size: 11pt;”><span style=”font-family: Segoe UI, Lucida Sans, sans-serif;”><span style=”background-color: #fafafa;”>if the partners distribute the $3.5 million to themselves, ($1.75 each), does the $1.75 go against their basis, their share of debt or both? Does this trigger a gain? Can they add the 3.5 million distributed to their share of nonrecourse debt since the LLC is still responsible for paying it? </span></span></span></div>