Discussion:S corp
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Discussion Forum Index --> Basic Tax Questions --> S corp
Discussion Forum Index --> Tax Questions --> S corp
| 11 June 2008 | |
| we are an s corp with 3 shareholders. we elected s status 2 years ago.
we have some built in gains tax. will we owe this tax if we sell the stock to a c corporation? | |
| 11 June 2008 | |
| Why don't you discuss this with an accountant?
We're not here to blindly give free advice. | |
| 11 June 2008 | |
| As long as the stock is sold (rather than the assets) and no 338(h)(10) election is made, then the built in gains tax should not be recognized. | |
| 11 June 2008 | |
| thanks we are looking for a new accountant.
The one who suggested the s election, did not tell us all the implications of that. he did not even suggest that we do a business valuation. We are learning all this from the prospective buyer and their attorney. smktax, thanks the buyer's attorney did mention the 338 section election | |
| June 11, 2008 | |
| Yep, need a new accountant then. But Smk's correct, when you sell the stock, the corp exists just as it did before, including the BIG tax potential. So if you sell the assets that have BIG and have a final net profit, within the ten years after electing S, you pay it. What many folks miss is that that includes cash basis taxpayers who collect AR! Or sell inventory. | |
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