Closely Held Businesses looking to negotiate a sale of their business will either do an Asset Sale or a Stock Sale.

Asset Sale

With an asset sale, the buyer is buying the assets of the business. These assets will be identified in the purchase and sale agreement. They may include accounts receivable, inventory and fixed assets including office furniture, machinery and vehicles. Additionally they may include intangible assets like customer lists, work force in place, goodwill and a non-compete agreement. Most buyers would prefer an asset sale as: more…

1) Harvest Capital Losses

Capital gains property includes stocks, bonds and mutual funds.  Currently, the stated rate on long term capital gains is 15%.  If you have a net loss after netting all of your gains and losses, the tax deduction is limited to $3,000. Any excess capital losses can be carried into the future. more…

Donors should give appreciated property to their favorite charity. Appreciated property is property whose Fair Market Value exceeds the cost basis.  Cost basis is generally what was paid for an item. more…

The sale of a capital asset will result in a capital gain.  Depending on the holding period of this asset, the gain will either be short-term or long-term. Long-term gains have a lower, preferred income tax rate.  The holding period begins on the day the asset is purchased, as measured by the trade date, to the day the asset is sold. Assets that are inherited are deemed to be held long term. more…

The primary reason to make the Subchapter S filing status election is to have a single federal income tax when the business is eventually sold. 

If the corporation is not an S corporation and the company assets are sold, there will be a double tax on sale.  The first tax will be at the corporation level.  A regular or C corporation will pay a tax on the gain on the sale of its assets.  The second tax will be when net proceeds are paid to the shareholders.

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