Forming an entity and transferring brokerage assets

Discussion in 'Taxes and Accounting' started by medtrader2020, Sep 8, 2020.

  1. I have unrealized gains of 200K+ in my brokerage account which I’d like to firm an entity and transfer my assets (positions) to. I spoke with Tradersaccounting and the lady rep (CPA?) said I can’t transfer my positions and I’d have to sell my stocks and then transfer the cash to LLC.

    BTW, I don’t trade actively and won’t qualify for TTS status for sure.

    But, I see TD AMeritrade and IBK allow transfer of accounts to LLC (found from their online forms).

    Has anyone transferred brokerage positions (open) to an LLC successfully? Thanks for your thoughts and comments.
     
  2. lindq

    lindq

    A few years ago with major brokerage, I too needed to zero positions and xfer cash.

    The obvious problem with transferring open positions into a new entity is valuing them. What is the cost basis? And what would be your personal tax liability when moving them from your account? Lots of issues.
     
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  3. BMK

    BMK

    In the USA, it is not illegal to form an LLC and transfer assets into it. And to my knowledge it is not prohibited by any regulations (e.g., SEC, CFTC, etc.).

    As lindq has pointed out, the question of basis can get complicated, particularly if the LLC has more than one member. But there is no reason you can't do it.

    If your broker won't allow it, then you may have to find a workaround.

    Open an individual account at another broker that will allow it. Transfer your positions from your individual account at your current broker to your individual account at the new broker. Then open an account for the LLC at the new broker, and transfer your positions from your individual account at the new broker to the LLC account at the new broker.

    But you should consult with a tax advisor to fully understand the consequences before you do this.

    BMK
     
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