The sale is one decision. What comes after is a hundred.
An owner stepping away trades a business for a balance sheet, usually in one year, usually once. We help with the years before, the structure of the sale itself, and the retirement that follows.
- Asset sale or stock sale: what does each one mean for my taxes?
- How is the purchase price allocated, and why does the buyer care so much?
- Does my stock qualify for the small business exclusion?
- What do I do with the proceeds in the year they arrive?
Asset sale or stock sale?
The buyer usually wants assets and the seller usually wants stock, because a C corporation's asset sale can be taxed twice. The gap between the two structures is often the largest number in the negotiation.
What does the purchase price allocation do to the seller?
Every dollar of the price is assigned to a class of asset, and each class is taxed differently to the seller. The allocation the buyer prefers is rarely the one the seller would choose, and it is negotiable.
Does the stock qualify for the Section 1202 exclusion?
Qualified small business stock held long enough can exclude a large part of the gain from federal tax. The qualification turns on how and when the stock was issued, which is settled years before the sale.
What happens to the proceeds in the year of the sale?
A single high-income year changes everything that keys off income: the tax bracket, Medicare premiums two years later, the room for charitable giving. The year of the sale is planned differently from every year after it.
Start with a conversation.
Forty-five minutes, by video, phone, or in Northbrook. Nothing to prepare, and no charge.