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Tax Structure for Selling S Corp Stock While Keeping Company Real Estate

M&A Tax Structures for Closely Held Businesses September 8, 2020 Introduction The buyer of a closely held business has strong reasons to purchase the target’s assets instead of stock. That way the buyer can pick and choose what assets to

Posted in F reorganization, S corporation, stock sale, unwanted assets Tagged with:

PLR Probably Closing Condition for Target S Corporation’s 2-Class Stock Issue

M&A Tax Stories September 2, 2020 Introduction A buyer of an S corporation wants to make sure that the target is in fact an S corporation. Finding out after closing risks potentially significant federal and state corporate income taxes. The

Posted in One class of stock, S corporation Tagged with:

Stock Seller Sues Buyers for Failure to Close S Corp Books to Obtain Q1 Taxable Loss

July 27, 2020 Introduction One tax issue when selling the stock of your S corporation business midyear is dividing up the year’s income and expenses. That is because an S corporation passes its income, and expenses through to the owners

Posted in further assurance provision, S corporation, Section 1377 election Tagged with: ,

Typo Forces Stock Seller of Business to Sue Buyer for Pre-Closing Tax Refund

July 10, 2020 Introduction There are lots of words in acquisition documents. A stock purchase agreement in a relatively simple transaction may contain 20,000 words. And there are many different references throughout the agreement to buyer and seller; and sometimes

Posted in allocation of preclosing taxes refunds and credits, stock purchase agreement, typo or scriverner's error Tagged with: ,

No Fraud for Positive Projections Proved Inaccurate in Hindsight

May 31, 2020 Introduction It is all too common for an acquired business to not perform as well as expected after the closing. But the fact that the target’s projections were inaccurate do not amount to a fraud claim. The

Posted in constructive fraud, federal securities fraud, fraud in business sale Tagged with: , ,

Owner Loses $14.5 Million Fraud Claim Against Majority Shareholder in Stock Deal

May 22, 2020 Introduction This deal is a reminder that a seller of a business needs to read the transactional documents (with the help of a competent lawyer) before signing. In this case it cost the seller $14.5 million. The

Posted in fraud in business sale, fraudulent inducement, shareholder release Tagged with: , ,

Buyer in All Cash Stock Deal Fights Mere Continuation Successor Liability Claim

May 15, 2020 Introduction A buyer of the stock of an unrelated company for cash usually does not worry about being directly liable for the target’s liabilities. Perhaps that is not the case when purchasing the stock a distressed business.

Posted in mere continuation exception, stock purchase agreement, successor liability Tagged with: , ,

Seller’s Stock Purchase Agreement Disclosure Schedule Blocks Buyer’s $1.4 Million Claim

Introduction The buyer of a company wants to minimize the risk that it overpays for a company. One way to minimize this risk is thorough due diligence. Find out everything you can about the target business. In addition, the buyer

Posted in disclosure schedule, No Undisclosed Liabilities, stock purchase agreement Tagged with: , ,

S Corp Stock Seller Can Sue Buyer for Not Closing Tax Books Mid-year

Introduction An S corporation does not pay federal corporate income tax. The S corporation passes its income, deductions and credits through to its shareholders, in proportion to their ownership interest in the S corporation. The shareholders then pay income tax

Posted in allocation of preclosing taxes refunds and credits, boilerplate provisions, further assurance provision, Internal Revenue Code Section 1377 election, purchase agreement, stock purchase agreement Tagged with: , , ,

Seller of target receiving privately held buyer stock failed to allege facts that established that buyer’s alleged fraud caused seller’s economic loss

Target is a Dallas based technology-consulting limited liability company and was owned by Sellers. Buyer is a technology services company then based in Jacksonville, Florida, and then owned by Buyer’s Owners. Buyer is privately held and not publicly traded. In

Posted in buyer's stock as currency, federal securities fraud, financial representation and warranty, purchase price, representations and warranties, stock purchase agreement, tying fraud to economic loss

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