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176. Does an Installment Sale Defer the Tax on Recapture of Accelerated Depreciation? No. Can the Tax on Recapture of Accelerated Depreciation Nevertheless Be Deferred When an Installment Sale Occurs? Yes.
162. Transfer a Family Business to the Next Generation During the Parent's Lifetime, Retain an Asset for Income, Give the Transferee a Stepped-up Basis, Defer the Gain on Sale, Support the Parent with Deductible Rent, and Finance the Transaction, Too
November 30, 2011
On September 27 (see below), I wrote that "the tax problem on the sale of a business is solved." I referred explicitly to the sale of a "C" corporation’s assets and the sale of the shareholders’ stock in the company.
I said that in addition to eliminating the tax on "phantom" income, the following results could be achieved: 1) Elimination of the tax entirely at the corporate level; (2) capital-gains treatment for the shareholders; and (3) deferral of that capital-gains tax for as much as 30 years, (4) without creating undue transactional risk, cost or complications for the seller or ultimate buyer.
Now I’ve been asked: Can comparable results be achieved on the sale of the assets of an "S" corporation and on the sale of the shareholders’ stock in the "S" corporation?
The answer is: yes. If your business ("C", "S", LLC, whatever) is for sale, we’ll show you how, and maintain careful attention to IRS Notice 2008-111.—Stan Crow
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The Latest Installment addresses situations, questions and issues which are brought to us in the course of the consideration, negotiation or execution of transactions. We don't use the real names of parties to transactions, and we may edit the statement of the question to try to tell the story better. Please feel free to comment, or to take issue, or to raise your own question or situation. If you do the latter, please do not relate any confidential information.
The Latest Installment blog is edited by Stanley D. Crow, who is president of S.Crow Collateral Corp.