In a real estate workout involving a partnership or limited liability company (entity) consideration has to be given to either (i) continue holding the property in the entity or (ii) having the entity sell the property. The tax consequences of each action are considered below.
Hold the Property
Despite its cash flow problems, the entity may choose to hold on to the property in order to buy time for individual investor actions at the individual partner level. Such a technique allows the individual partners to choose the best time and most appropriate method for disposing of their interests.
