Asset sales

Forum|Forum|1 year ago
August 28, 2024
2 replies
15 views

I have an S-Corp customer that is not selling the business but only selling the land and building. The land is in the S-Corps name and the building over time has been being depreciated. I know basis is cost + improvements - depreciation.

Does the shareholders basis in the company affect his taxes in any way? Or no because he is not selling the company only closing the company and selling the assets.

Yes I have sort of asked this before but deleted as things changed.

Thank y'all for you time.

ProSeries Professional

This topic has been closed for replies.

IRonMaN

Level 15

If he has been the sole shareholder from day 1 - no. A gain will most likely be generated from the sale of the assets, which increases his basis. When he ultimately pulls the cash out, it will be a return of his basis.

Slava Ukraini!

J

judys3Author

Level 6

He has been the sole owner. Thank you IRonMaN

IRonMaN

Level 15

You betcha!

Slava Ukraini!

S

strongsilence

Level 10

Why is the shareholder selling the assets? Is it to avoid the limitations of a stock sale? interesting.

I have read that taxable events are created when S corporations distribute profits to shareholders and when shareholders sell or liquidate their stock.

IRonMaN

Level 15

Maybe I live in a different world, but most folks I see buy assets instead of stock. You don't have the sins of the past coming back to bite you as you possibly could buying the stock and you get a fresh start on deductions in the form of depreciation and/or amortization.

Taxable events do happen if you sell stock, but if you have been there since day one, the liquidation of stock should not result in any taxable events since you are returning basis back to the shareholder.

Slava Ukraini!

Sign up

Login with SSO

Let's get you signed in

Login with SSO