Review the sale of both C corps and S corps, including planning related to a possible liquidation after the asset sale. Plus, identify tax and non-tax differences between an asset sale and a stock sale.
The sale of a corporate business by selling the assets is a situation where effective tax planning can reduce the tax cost to both the buyer and seller. We'll discuss the use of compensation for services, covenants not to compete, personal goodwill and contingent consideration.
- Identify tax and non-tax differences between an asset sale and a stock sale.
- Determine possible benefits from using compensation arrangements, covenants not to compete, personal goodwill and contingent consideration.
- Identify the differences between selling the assets of an S corp compared to a C corp.
- Recognize the tax significance and relevant legal authority related to allocation of purchase price among the assets purchased.
- Recall the law applicable to "purchased intangibles."
- Identify tax considerations related to asset sales after the death of the shareholder.
Level of Difficulty:
- Stock sale vs. asset sale: tax and non-tax differences.
- Compensating the selling shareholders for services performed.
- Covenants not to compete.
- Personal goodwill.
- Contingent consideration.
- Built-in gain planning.
- Installment sales.
- Allocation of purchase price among the assets.
- Planning when target has net operating losses or tax credits.
An understanding of the taxation of individuals, corporations, S corporations and partnerships or at least two years of experience in advising privately owned businesses.