Asset Sale or Stock Sale? The Double Tax on a C Corporation: the two routes in the example
2026 law · reviewed September 7, 2026
| Step | Asset sale | Stock sale |
|---|---|---|
| Sale price | $5,000,000 | $5,000,000 |
| Corporate tax at 21% on the gain over the inside basis | $840,000 | None |
| Distributed to the shareholder in liquidation | $4,160,000 | Not applicable |
| Shareholder tax at 23.8% on the gain over the stock basis | $871,080 | $1,071,000 |
| Total tax | $1,711,080 | $1,071,000 |
| What the shareholder keeps | $3,288,920 | $3,929,000 |
| Price that leaves the shareholder equal | $6,063,291 | $4,160,000 |
A $5,000,000 sale, $1,000,000 inside basis, $500,000 stock basis, 20% plus the 3.8% surtax (§§ 11(b), 331, 1411).
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