TAX QUESTION

Parker13Parker13 Posts: 2subscriber
We are selling our business - we will have a profit of about 350K. Is there any way to avoid taxes - such as reinvesting the money right away? Is there a way to ballpark calculate the tax on that amount?
Thank you.

Comments

  • glgcpaglgcpa Posts: 0subscriber
    You have not even begun to supply enough information to answer your questions.  For starters one would need to know:The type of entityThe number of ownersHow you calculated the gain (did you do it properly? is this really gain or is some of it considered income?)What was the gain for - buildings, inventory, goodwill, etc?What do you plan on using the money for?Is this an installment sale or a lump sum payment?What`s your income bracket?How long did you own the entity before you sold it?What type of business were you in?
  • vwebworldvwebworld Posts: 40subscriber
    In addition to the above posts, I`d add....
     
    In general you can not avoid taxation by reinvesting.
     
    The gain you anticipate may not be the taxable gain depending upon what you`re selling, your basis, and selling terms. Also, how it is taxed depends upon the structure of the ownership (a corp., sub-s, partnership, sole-proprietor...)
     
    ~Roland
  • glgcpaglgcpa Posts: 0subscriber
    Thank you both for your kind words.
     
    Roland, you`re correct that you cannot avoid taxation by reinvesting, but depending on the type of entity and business he may be able to defer some or all of the tax on profits by reinvesting it.
     
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