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The Tax Aspects of Acquiring a Business by W. Eugene Seago

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Chapter 3

The Purchase and Sale of an S Corporation

The purchase and sale of an S corporation can be accomplished by either a purchase of the assets and liquidation of the corporation, or simply a ­purchase and sale of the stock. These are the same options as are available for the purchase or sale of a C corporation. However, unlike the sale of the C corporation assets or stock, the double-tax on corporate gains is generally not an issue when the target is an S corporation. The major issues for the owners of the S business are the timing and character of the income, and the major issue for the purchaser is the basis obtained in the assets.

The Asset Sale Versus the Stock Sale

A sale of S corporation stock without a liquidation of the corporation ...

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