I am thinking of converting my sole proprietorship into an LLC, but I need to know if the real estate I transfer into the LLC will be subject to capital gains taxes? The real estate is located in California.

ANSWER

The BIDaWIZ Team's Answer:

If you elect to be taxed as a partnership under IRC Section 721, there will be no gain or loss recognized. In terms of California specific taxes, the only area to consider is California Documentary Transfer Tax Act. However, given the nature of the transfer, you would not be subject to this tax.