Updated September 28, 2026
The building sells the same way any multifamily property sells — marketing, offers, escrow, close. What's structurally different is what happens to the money afterward, and it's the part most owners haven't priced into their decision before they call a broker. A C-corporation is a taxpayer in its own right. When it sells the building, it pays tax on the gain. When it then distributes what's left to shareholders, they pay tax again, on the same dollars, as a dividend. That is double taxation, and it is the fact that separates a C-corp-owned sale from every other ownership structure covered on this site.
An LLC selling a building faces one level of tax — the gain passes through to the members, taxed once on their individual returns. A C-corporation faces two: corporate-level tax on the gain, then shareholder-level tax again when what's left gets distributed. A building held inside a C-corp for decades on a low basis often has a substantial gain, and two layers of tax can consume a meaningfully larger share of the proceeds than the same building would lose held in an LLC. This is not a paperwork difference — it changes what the sale is actually worth to the people who own the corporation.
Asset sale. The corporation sells the building, recognizes the gain, and pays corporate income tax on it. What's left gets distributed to shareholders, who pay tax again on the distribution — as a dividend, or in some cases a return of capital or capital gain depending on their stock basis. This is the double-tax scenario in its most direct form, and the default outcome absent specific planning.
Stock sale. A buyer purchases the shareholders' stock directly instead. The shareholders pay capital gains tax once, on the difference between their sale price and their basis — a single layer, much closer to how an LLC interest sale works. The corporation continues to exist, under new ownership, still holding the building at its existing, often low, basis.
The catch: most multifamily buyers don't want to buy stock. A stock purchase means inheriting the corporation itself — its history, liabilities, and tax positions — in exchange for a building they could otherwise buy cleanly with a fresh, stepped-up basis for their own depreciation. Buyers who understand the difference prefer the asset purchase and will discount a stock-purchase structure to compensate for the risk. The seller wants the stock sale; the buyer wants the asset sale. Resolving that tension is usually a negotiation over price, not a choice either side makes alone.
How large is the built-in gain? A corporation that's held the building for decades on a low basis has a large gain, and the double-tax exposure on an asset sale is correspondingly larger — the bigger the gain, the more a stock-sale structure is worth fighting for.
Is this a long-standing S-corp election, or a straight C-corp? Some corporations elected S-corp status after being formed as a C-corp. If the election has been in place long enough — generally more than five years — it may have avoided the built-in-gains tax that applies to a more recent conversion. This requires reviewing the corporation's specific election history, not an assumption either way.
Will shareholders accept a stock-sale discount to avoid double taxation? Sometimes a lower headline price through a stock sale beats a higher one taxed twice through an asset sale — a net-proceeds comparison, not a headline-price one, and the two can point in different directions depending on the size of the gain.
Is a pre-sale restructuring worth doing? Converting the corporation's structure or distributing the property out of it well in advance of a sale can sometimes change the outcome, but these moves carry their own tax consequences and are not something to attempt without a CPA and tax counsel from the start.
Get your accountant and a tax attorney into the conversation before you talk to buyers, not after an offer arrives. The structure question moves more money than almost any negotiation over the headline price, and a seller who discovers the double-tax exposure in escrow, already committed to a structure with a buyer who won't budge, has far fewer options than one who worked it out months earlier.
The building itself sells the same way any comparable building sells — the market doesn't care that a corporation owns it. The full process is in how to sell a multifamily property in Los Angeles. Owners spend months on a listing price and days on a sale structure, when the structure decision can move more money than the price negotiation does. The building doesn't know who owns it. The tax code does.
Request a free evaluation of your building — and bring your CPA into the conversation early →
Does a C-corp sale take longer to close than a normal sale?
Not on the real estate side — marketing and escrow run the same timeline. The structure conversation is better resolved before listing, so it doesn't add delay once a buyer is at the table.
Is an S-corp the same problem as a C-corp?
Not always. A long-standing S-corp election can avoid the double-tax exposure, but the built-in-gains rules depend on how long the election has been in place. Confirm the specific history with your CPA.
How do I sell an apartment building owned by an LLC instead?
See how do I sell an LA apartment building that's owned by an LLC — the LLC structure generally avoids the double-tax problem that a C-corporation creates, which is the core difference between the two ownership types at sale.
Michael Sterman is Senior Managing Director Investments at Marcus & Millichap, specializing in Los Angeles multifamily transactions.
Thinking about selling? Get a no-obligation evaluation on your building.
Request Free Evaluation →