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

  • Do You Know How Much Your Business Is Worth?

    Tips for placing a value on your business

    There are several reasons why you should know the value of your business. if you are planning to sell your business, the general rule is that you should sell it for fair market value. In many instances the term "fair market value" is somewhat ambiguous. In the simplest sense, fair market value is what a willing buyer would pay a willing seller, with each party knowing all the pertinent facts.

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Small Business Quick Tip

  • Business Mileage Rate 2

    The optional standard mileage rate for the business use of an automobile is 54 cents per mile in 2016.
Monday, 17th June 2019
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Tax Tips Personal

  • IRAs and Charitable Contributions

    New option for charitable giving

    If you are age 70 1/2 or older, there is another option for you to consider when making charitable contributions. Beginning after December 31, 2005, you may be allowed to make a charitable contribution of up to $100,000 of distributions from your IRA. Although there is no charitable contribution deduction allowed,

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Personal Quick Tip

  • Teacher Expenses

    If you are a teacher who spent your own money for classroom supplies, you can take a deduction for up to $250 of those costs.