Buying and Selling Corporate Businesses: Using Installment Obligations 2024

Overview

When a corporate business is sold, it is common for part of the consideration received to include an installment obligation of the buyer. Weigh the tax consequences of using installment obligations as part of a corporation’s stock or asset sales. Discuss both S corporations and C corporations. Evaluate the use of a contingent purchase price. Analyze and identify tax planning opportunities.

Highlights

Discussion of the law relevant to deferring gain using the installment method (IRC 453 and 453B(h))
Description and analysis of the installment sale of the stock of both an S corporation and a C corporation
The use of an installment obligation related to the sale of the assets of both an S corporation and a C corporation, including consideration of when to liquidate the corporation
Evaluation of the tax consequences of a note with a contingent amount
Tax planning opportunities and strategies

Prerequisites

An understanding of the basics of taxation of installment sales, individuals, corporations and S corporations.

Designed For

CPAs and attorneys.

Objectives

Understand the general approach of installment reporting of gain (IRC 453)
Discuss the tax consideration related to the installment sale of the stock of both S corporations and C corporations
Review and evaluate the law related to the installment sale of assets of either an S corporation or a C corporation, including the decision on when to liquidate the corporation
Analyze the tax law applicable when the installment note includes a contingent amount