In determining the sales price in an acquisition, the seller must determine how assumed liabilities will be treated and either adjust the sales price accordingly or plan to allow the deduction to occur prior to sale. […]
Read More… from Selling a Business: Plan Carefully for Assumed Liabilities and Deferred Compensation
This case highlights the need for C corporations to have a dividend policy and history. It also highlights the need to carefully consider the compensation paid each year to the shareholder-employee of a closely held corporation to have better support of reasonable compensation in order to avoid the recharacterization of deductible compensation to nondeductible dividend distributions. It would likely have been tax advantageous for the Taxpayer to be an S corporation. […]
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