Sale Tax in a Transfer of Assets

[Alexa99]

Hi,

I have this situation:

     * I am a Sole proprietor transferring the assets to a new Llc (only member) my self . For IRS this transfer of assets is NO sale. But what about Kansas State? Should be a transfer too right? How to do this in the State? I Ask the Vehicles department in town and they said is a sale of Vehicles and have to pay Sale tax. 
Is there any process to follow in the state that allow a transfer of assets and not pay sales tax? 
Thank you

[Anonymous_]

See https://www.ksrevenue.gov/eservices.html

[Alexa99]

Thank you....

Can you please show me where to go exactly??? 🙂  

I already call the customer service center few times before, and they always send me to Vehicle Department and they don't know nothing about transfers, they want me to pay Sale tax in order to get a New Tiles for the Vehicles from personal to and LLC..  And also is equipment involved.  

I checked and they have information with Closing a Business or Selling a Business, but I could find Transferring with the same owner.

[Alexa99]

Sorry, I should have said " but I could not find anything about Transferring with the same owner"

[Anonymous_]

You would think there would be an exemption for such transfers (there are in other states), but you have to check with the department in Kansas.

[Alexa99]

I might not being talking with the right people in the customer service in the State of Kansas, I will contact them again and explain them about the exemption in other states, and to help me because is the only thing that I am waiting on to create the LLC and transfer the Assets.. 

Thank you so much. Because I am so worried about it.  I called a Lawyer and CPA and didn’t know how to proceed in Kansas. 
Thank so much Tag-team for taking the time to answer.

[Critter-3]

Unless you want to retitle the vehicle into the Corporation's name you don't have to do anything. If this LLC is not going to be incorporated for tax purposes with the IRS I would leave well enough alone. 

[Alexa99]

Is a Construction company and  This year 2024 :

1.- It would be a one member and reporting in Schedule C (1040) because might not be that much income. 

2-~ For 2025 we are taking for sure the election for S-Corp. or unless is a good year 2024 we need to take the late election for S- Corp.
3.- Vehicle insurance, Liability, Works-Comp, Payroll will get them under the LLC.

4. Yes we want to reTile the Vehicles and trailers 

under the New LLC. and deduct all expenses under the LLC.  Because I don’t want to rent them from personal to LLC…. How to do it right? :(

[Critter-3 · Accepted solution]

1.- It would be a one member and reporting in Schedule C (1040) because might not be that much income. Ok ... filing a Sch C doesn't require a change in title.

2-~ For 2025 we are taking for sure the election for S-Corp. or unless is a good year 2024 we need to take the late election for S- Corp.  Once you incorporate on the federal level then titleing the vehicle in the corp name is wise. 
3.- Vehicle insurance, Liability, Works-Comp, Payroll will get them under the LLC.  If the vehicle in in the company name the insurance should also be in the company name along with any loan on the asset.

4. Yes we want to reTile the Vehicles and trailers 

under the New LLC. and deduct all expenses under the LLC.  Because I don’t want to rent them from personal to LLC….   This is a good idea ... you probably should talk to the DMV about getting the titles changed ... you probably need to sell the asset to the company from the Sch C.  Having a bill of sale for the adjusted basis may help get the transfer done.  Also talk to your auto insurance company and/or a local tax pro to get more information on this matter. 

[Alexa99]

Thanks so much Critter-3. for your helpful information and sharing all your knowledge. I really appreciate it. Then, I don't have to worry about the Re-Tiles while a continue reporting in Sch-C (LLC single member) Thank you!!!

For the Re-tile I already talked to the DMV several times, and they insist it's a Sale, and a FMV to be reported.

The Assets are already depreciated (sec 179).  With a Bill of Sale, I would end up paying around 5K of sale Tax. :(

I will Insist with Customer Service of the Department of Revenue to let me know if there is Certificate of exemption for this kind of transfers, like Champ tagteam recommended. Because this situation should follow the same path as Federal, "Not a Sale" just "Transfer of Assets."  I hope, I receive an answer from the State, I have been insisting for a month with no luck.