The sale of a C corporation business that is structured as an asset sale is subject to two levels of tax. There is a tax on the corporation (21% federal) and a tax on the shareholders when the sales proceeds are distributed (20% federal). By comparison, on a sale of stock, a shareholder is only
Content by Ivan H. Golden (Chicago)
Many businesses operate as S corporations because of the tax benefits they offer – namely, the ability to avoid corporate tax on the business’ earnings.
Unlike C corporations, S corporations do not pay income tax; instead, profits (and losses) are passed through to owners, who pay tax on the
Content by Dimitrios Lalos (Minneapolis) and Nathan Hagerman (Indianapolis)
Effective July 1st, Minnesota instituted new Retail Delivery Fee obligations for sellers of product delivered into Minnesota to raise revenue for infrastructure and road improvements. Sellers with $1 million or more in retail sales must collect and remit to the Minnesota Department of Revenue, or pay
When a company sees its stock value drop, this can result in employees holding options that are “underwater“ or “out of the money“. This can significantly undermine the intended incentive effect desired by the employer in issuing the option. For these reasons, employers might consider whether to reduce the exercise price on outstanding awards to
Oftentimes when a partnership plans to sell real estate, some partners want to cash out while other want to roll over into other real estate tax-free. The challenge is that if the partnership receives cash in part to pay to the partners cashing out, then all the partners would be taxed on their percentage of
When an S corp seeks to wind up its affairs by selling assets in an installment sale and then liquidating, the distribution of the note along with other property (e.g., cash retained or downpayment) can trigger unintentional acceleration of tax on the deferred gain.
The Internal Revenue Code provides that an S corp may distribute
Generally, buyers of businesses want to buy assets so they can take a step up on a tax basis. Sellers prefer to sell stock, so their gain will be taxable at favorable capital gains rates. Some gain is usually taxable at higher ordinary income tax rates in an asset sale. Accordingly, S corporation owners who have
Earlier this year, Indiana instituted new successor liability notice requirements for sellers and buyers involved in bulk transactions of businesses and business assets in Indiana. For deals closing on or after Feb. 14, 2024, and involving transfers of more than 50% of the tangible personal property of a business, transferees may be liable for the
Beginning in 2022, businesses are now required to capitalize specified research and experimental expenditures (“SRE expenditures“) and amortize (deduct) them over time. Expenditures attributable to domestic research are amortized over five years and expenditures attributable to foreign research are amortized over 15 years. SRE expenditures are generally research and development costs in an experimental or
As you probably know, in a like-kind exchange, any sale proceeds that you do not apply to purchasing a new investment property will be taxable (up to the total gain on the property). The challenge with making a like-kind exchange of property in a seller-financed sale is that the seller doesn’t receive any (or very
