Selling financial capital
“I would rather expire at my desk than to sell my business and pay Uncle Sam one dime in taxes.” How many owners that have paid their fair share of taxes for twenty years of building their business feel this way? The tax bite is the single biggest factor in an owner’s reluctance to sell his/her company.
I have previously written articles discussing various aspects of transaction structures to minimize taxes. As a result, I am often contacted by a panicked seller that is a week from closing his business sale as he looks in disbelief at his accountant’s spreadsheet detailing the tax burden of his impending sale.
Recently, the seller of a Sub Chapter S Corporation with an $8 million transaction value contacted me. The tax basis was below $200, 000 and $4 million of the transaction value was the assumption of debt. When the dust settled, he was looking at a capital gains tax liability of a staggering $965, 000 while only receiving the remainder of proceeds after the assumption of debt. The assumption of debt is considered as part of the capital gain for tax purposes.
The owner sent his accountant’s spreadsheet to me and since I am not a tax accountant, I sent it to my tax wizard at BDO Seidman. He found a few small tweaks, but said that there was not much that could be done from an accounting standpoint for this owner. When I reported this back to the seller I could feel his disappointment and frustration.
Source: capital financial
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Jonathan Wheatley &
Joe Leahy in São Paulo
Published: January 9 2011
Last updated: January 10 2011
Brazil has warned that the world is on course for a full-blown trade war as it stepped up its rhetoric against exchange rate manipulation.
Guido Mantega, financ...ank launched a surprise measure to curb short selling of the dollar against the real by onshore banks. You can expect more measures on the futures market, he said.
Mr Mantega said that Brazils trade with the US had slipped from an annual surplus of about $15bn (£9.6bn) in Brazils favour to a deficit of $6bn since the US began trying to reflate its economy through loose monetary policy.
The residual effects of the Enron (ENE) debacle are slowly, but surely, beginning to PERMEATE the investment landscape. In many instances it is hard to know whether the secondary problems are critically severe, or just a case of paranoid investors overreacting to ghosts. In 1997, ENE was a rather ordinary gas distribution company trading at $20/share. In the 1998-2000 period, the stock rocketed ...AVG. EQUAL WTD. % CHANGE/POSITION IN 2000................................................
For 2000 activity, see prior newsletter detail at
Note-Return does not include dividends, commissions, or taxes in calculation (current yield = 2.2%)
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**Old Position closed this week
Dave Anderson, President, Gold Investment Advisors,
Off-balance-sheet land is where death spirals lurk
Enron's crash has shown that very scary liabilities can hide in a set of books.
pay no attention to those liabilities behind the curtain.
That is the message corporate America has sent to investors in recent years as executives have shunted billions of dollars in new and existing financial obligations off their books and into the nether world known as 'off the balance sheet'.
W...s in the market, it leads to decline in confidence.'
Ms Levenson, the bond analyst, agreed. 'I truly believe if Enron had kept all this stuff on the balance sheet and worked it into its maturity schedule just like any other debt, even if it meant carrying a $US3 billion higher debt load,' she said, 'it may not have been a strong triple-B credit but it might still be a going concern today.'
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