Considers the sale of the stock of both C corporations and S corporations to accomplish the sale of s business. Discuss the use of compensation for services, covenants not to compete, personal goodwill and contingent consideration, as well as the use of installment sales. Expertise in the sale of a corporate business by selling corporate stock can result in effective tax planning reducing the tax cost to both the buyer and the seller. Also, considers the possible application of IRC 1202, 1042 and 1045. The possible value of a Section 338, 338(h)(10) or when 336(e) elections are considered.
Learning Objectives
- Determine tax and non-tax differences between a stock sale and an asset sale.
- Identify possible benefits from using compensation arrangements, covenants not to compete, personal goodwill and contingent consideration.
- Recognize differences between selling the stock of a C corporation compared to an S corporation
- Identify possible benefits of Section 1042, 1045 and 1202.
- Recall S corporation tax planning opportunities related to suspended losses, installment sales and termination of S corporation status.
- Recognize when a Qualified Subchapter S Subsidiary election (QSUB election) is beneficial.
- Determine how a stock redemption could be used.
Major Topics
- Stock sale vs asset sale
- S Corp versus C corporation
- Sale of Qualified Small Business Stock (IRC 1202 and 1045)
- "Survival" of net operating losses and tax credit carryforwards
- Planning regarding S corporation suspended losses
- Section 338, 338(h)(10) or 336(e) elections
- Qualified Subchapter S Subsidiary Election ( QSUB election)
- S Corp election termination planning
- Stock redemptions related to a stock sale
