We had a client with a similar situation. The sale happened in 2022. An LLC paying taxes as an S-Corp sold for 80M. The transaction was a stock sale for Legal and an asset sale for tax. We researched IRC 1202 but did not meet the test. The entity was never a C Corp.
We elected into the NYS PTET but the thing is that he will have a loss for the short year in 2022 and the capital gains will kick in at the individual level.
Is there any other provision out there that could help reducing the capital gain.
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Nurys Santos CPA
EDWARD D. HEBEN, CPA
Thornwood NY
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Original Message:
Sent: 02-16-2023 10:22 AM
From: Gabriel Bentovim
Subject: Client Business be acquired in a stock sale
Interesting that you ask that Abby. We were having that conversation last night pertaining to the 2023 election. I am hoping that if they make an election and a payment before closing then they will be able to use the PTET as the profit for the first quarter could be as much as $1,500,000 to $2,000,000 .
Does it affect my client the seller how the purchaser chooses to treat the purchase?
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GABE BENTOVIM
HOFFMAN & BENTOVIM, C.P.A.'S P.C.
6500 JERICHO TURNPIKE
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Original Message:
Sent: 2/16/2023 8:06:00 AM
From: Abby Alhante
Subject: RE: Client Business be acquired in a stock sale
Hi Gabe
Yes, you have it exactly right. I had the identical situation .
Let's kick it up a notch, have you elected in to the PTET for 2022 and already for 2023 ?
Is the purchaser planning on treating this as an asset purchase in substance, even though it was a stock purchase by contract. ? section 338 purchase ?
Abby Alhante, CPA
Kurcias & Alhante, LLC CPAs
525 Broadhollow Road Suite 104
Melville NY 11747
516.829-5890 Ext 2 Fax 516-829-3976
Mobile 516-381-9301
AbbyA@KurciasAlhanteCPAs.com
( E mail response preferred )
Original Message:
Sent: 2/16/2023 7:58:00 AM
From: Gabriel Bentovim
Subject: Client Business be acquired in a stock sale
My clients S corporation is being acquired in a stock sale. The purchasers are an investment group and intend to terminate the S election immediately upon purchase. Assuming the purchase takes place on 3/31 would that mean my client files a short year S corp return in 2023 and the purchaser files a Corp return for 2023 using the same federal id#?
On a stock sale I assume they cannot change the federal ID# even though they are switching to C status.
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Gabriel Bentovim
HOFFMAN & BENTOVIM, CPAs PC
Commack NY
631-499-1500
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