Carefully review your options before making a decision

When it come time to sell your corporation, you have two options. You can either sell the corporation stock or have the corporation sell the assets and distribute the proceeds. The tax implications of the two sales are very different. If you choose to sell the stock, you are the seller. The corporation is not affected by the transaction. The new owner steps into your shoes as the shareholder and takes over the existing corporation. If your share of the proceeds exceeds your basis in the stock, you'll have a capital gain to report on Schedule D.

If the corporation sells its assets, the corporation may close its doors. The assets could be sold to one person who intends to operate a business similar to yours, but does not want your corporation. The corporation return will reflect the sale of the assets. When the corporation liquidates, your share of the cash will be reported on Form 1099-DIV as a liquidating distribution. You'll use Form 1099-DIV to report the sale of your stock on Schedule D. Selling assets of the corporation could result in double taxation. The sale of the assets is taxable to the corporation and the liquidating distribution is taxable to the shareholder.

If you are selling the corporation stock for a loss, you may qualify for special tax treatment. It's a good idea to review the tax consequences of the sale with your tax advisor before making a move.

Tax Tips Small Business

  • Employers of Tipped Employees Allowed a Tax Credit

    Are you getting the credit you deserve?

    If you are an employer in the food and beverage industry, you may be entitled to a tax credit for the social security and Medicare taxes you pay on your employees' tip income. You must meet both of the following requirements to qualify for the credit:

    Read more ...

Small Business Quick Tip

  • SS Wage Base

    The Social Security wage base increases to $118,500 in 2016. This means that you are no longer required to withhold social security tax for employees after meeting this threshold. However, you are required to withhold Medicare taxes regardless of the amount of wages paid.
Friday, 17th August 2018
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Tax Tips Personal

  • Saving for Your Retirement

    Certain taxpayers are eligible for a tax credit

    If your adjusted gross income is less than $50,000, you may be eligible for a nonrefundable credit against your income tax for elective contributions you make to §401 (k) plans,

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Personal Quick Tip

  • IRA Contribution Deadline

    If by year-end you haven't contributed funds to your 2016 IRA, or if you've put in less than the maximum allowed, don't worry. You can contribute to either a traditional or Roth IRA until the April due date for filing your tax return for 2016 not including extensions. You can contribute up to $5,500 to your IRA each year. If you are age 50 or older, you are allowed to contribute an additional $1,000.