I have previously discussed tax opportunities for selling the business by a C corporation. I would like now to switch our focus to options available to S corporations.
One of the options for an S corporation to sell its business is to sell its underlying assets. This is often a preferred option by a potential buyer as it provides a step up in acquired assets. Unlike a C corporation, the S corporation is a pass-through entity and its federal taxable income is only taxed at a shareholder level. Thus, double taxation is usually avoided with some limited exceptions. (more…)
Selling your business may seem like a natural progression for your company and the possibility of early retirement may look closer than ever, but without careful planning and execution and thorough consideration of the tax impact of sale, eventual financial outcome may end up being much smaller than anticipated.
You can structure sale of your business in two primary ways: 1) sale of the stock or interest in the company or 2) sale of underlying assets. Depending on the structure chosen, special elections made and type of underlying assets, composition of gain as ordinary vs capital may differ significantly and so may the tax liability.
Now let’s consider tax consequences of selling your business under two different scenarios. Under the first scenario, you are the owner of a closely held C corporation. Under the second scenario, you are the owner of a pass-through entity, an S corporation or a partnership. (more…)
As the FASB and the IASB slowly inch through their long-standing leasing project that will, in all likelihood, move all leases longer than one year to the balance sheet, it doesn’t mean that current GAAP requirements for leases don’t present some challenges, even for simple office facility leases.
Silicon Valley continues to buzz as a hub for start-up capital around the world. I’ve lived here my whole life and it is amazing to me how much private capital is available and just waiting to be invested in the next Google, the next Amazon, and the next eBay. Recently, it seems capital is being made available through so many more channels than just the traditional “straight to IPO” pathway. It seems to me that the “IPO way” is becoming less and less attractive to founders and entrepreneurs. I’ve been thinking about whether the stock markets as we historically know them to operate will continue and, if so, for how long and in what capacity?…
I recently received a phone call from a CFO asking for a crash course in accounting for business combinations. Merger and acquisition activity is increasing as corporations look to grow, so the need for info on business combinations is great. In fact, a couple of my more successful clients underwent acquisitions in 2011 to larger corporations. In addition, clients are also interested in acquiring companies that will strategically benefit their growth. As I was putting materials together for this CFO, a couple things jumped out at me regarding intangible assets that I feel are not often thought about during the merger and acquisition process…