Discussion:C-Corporation Sale

Would the following two scenarios be accurate in regards to the sale?

1) The assets of the company are sold to the purchaser, and the loss is created within the corporation.

2) My clients sells the shares of the corporation to the purchaser, which will create the loss personally and allow them to carry it forward.

Any thoughts to get me started would be appreciated.

I'm thinking that with a sale of the assets, the corporation realizes a gain or loss, based on the basis of the assets in the corporation that are being sold. Then when the corporation liquidates, the shareholder receives all of the cash left in the corporation as redemption proceeds, and realizes a capital gain or loss, based on his cost basis for his stock.

With a sale of the corporation, the shareholder receives the proceeds and realizes a gain or loss, depending on his cost basis for the stock.

So, you need to figure the net results based on the above.

But, be prepared - it's highly unusual for a buyer to want to buy the corporation stock, rather than the corporate assets.

If you're going with a stock sale, your're going to need to discount the price even further. I have also heard about brokers that specialize in corps with trapped NOL's.