Taxation Question:Buying a MHP and the owners C Corp

Hello everyone,

I am a Canadian looking at doing a seller financed deal buying a MHP in Michigan BUT the seller will not sell unless her company goes

with the deal. Her operating company is formed as a C Corp so my question is this: Is there any ramifications in buying her shares of her C Corp?the deal structure is good: 10 year balloon, low rate, 95% full, no park owned homes, 4 vacant lots to LTO and lots of land to expand if wanted.

Obviously she wants to lower her tax burden,but what carry over concerns would I have? …I have a company formed in Ohio and I am sure I can register in Michigan as well with my company. For strategy sake, I would be best to just buy the MHP in my company name but knowing the seller wont want this, has any of you bought a park under these considerations and what did you watch out for?..any help would be great! and a big thanks to all your great help in the past! …PS: I will of course use a good lawyer and accountant to review the deal, but they are not MHP pros which is why I am asking?

(oh dear…here i am again…no where to be seen on this forum for years and years…then, it’s like missy chatty kathy partying down all over town…)

wow stacy m from canada…what a great question!..i look forward to someone answering it for you.

i am in the process of looking at a campground where the owner is giving the option to

purchase the c-corp at a nice discount…as opposed to an asset purchase; i.e., the campground


she says it because they have owned the property for a long time and they have “zero basis”…

now, being a new and ignorant investor, i don’t really know exactly what that means yet…

thanks, again stacy m!

bye for now…sez, the rei lady

Don’t do it. There’s no upside to your assuming his or her potential liabilities.

The answer is very simple. No. The explanantion is that a coporation in the U.S. is considered to be an entity that has a life and through its life makes good and bad decisions and also has things happen to it that are out of its control. Just like an individual. When you buy the stock you get all of the baggage which could include someone lingering out there with a legitimate claim against the corporation. And it is very possible that the current shareholders may have no knowledge of this. But when you buy their shares that liability moves over to the new shareholder who is now you. The shareholders who sold their shares to you received favorable tax treatment by only having to pay 15% (2012 tax law) on the gain of the sale because it is considered a long-term gain and I’ll bet their cost basis is small. They may sweeten the deal (and should) if you do buy the C (also known as a regular) corporation but the risk/reward could work against you. Buy the assets only. Leave them with the coporate shell.