Buying and Selling Corporate Businesses: Stock Sales 2024

Overview

Considers the sale of the stock of both C corporations and S corporations to accomplish the sale of a business. Discuss the use of compensation for services, covenants not to compete, personal goodwill and contingent consideration, and 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, consider 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.

Highlights

• Stock sale vs asset sale • S corporation 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 corporation election termination planning • Stock redemptions related to a stock sale

Prerequisites

An understanding of the taxation of individuals, C corporations, S corporations and partnerships.

Designed For

CPAs and attorneys.

Objectives

• Determine tax and non-tax differences between a stock sale and an asset sale • Identify 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 benefits of Sections 1042, 1045 and 1202 • Recall S corporation tax planning opportunities related to suspended losses, installment sales and termination of S corporation status

Preparation

None