How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Jon Andrews Your Own Question
Jon Andrews
Jon Andrews, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 3118
Experience:  I deal with all levels of tax planning and controversy - from the ordinary to the complex.
4750
Type Your Tax Question Here...
Jon Andrews is online now
A new question is answered every 9 seconds

if I sell my business, how much time, if any, do I have to

Resolved Question:

if I sell my business, how much time, if any, do I have to re-invest before I paying capital gains? how are capital gains taxes determined?
Submitted: 8 years ago.
Category: Tax
Expert:  RD replied 8 years ago.

What assets are you selling?

 

The like kind exchange provisions under IRC Sec. 1031 allows company to defer the recognition of taxable gains by exchanging business assets with new, similar assets.

 

 

 

 

Customer: replied 8 years ago.
ok...it's a service business...so assets are minimal as far as furniture/equipment. The bulk is "goodwill" and contract services which will be sustained after sale; plus the name as far as reputation
Customer: replied 8 years ago.

just waiting to hear from you

 

Expert:  Jon Andrews replied 8 years ago.

Section 1031 will not allow you to reinvest and defer gains from the sale of goodwill and other intangible assets. Generally speaking, this sale (based on the information provided) is going to be taxable.

 

The capital gain will be determined by subtracting your "cost basis" from the selling price. Unless you purchased the business from a previous owner, the cost basis in your goodwill will be $0 and, therefore, the entire amount allocated to goodwill would be taxed as a long term capital gain - maximum tax rate of 20%. It is possible that this transaction will trigger alternative minimum tax as well. You should probably sit down with someone knowledgable and give them all of the information including the dollar amounts and your other income/expense amounts so that you have a good handle on what the actual tax implications will be.

 

jon

Jon Andrews, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 3118
Experience: I deal with all levels of tax planning and controversy - from the ordinary to the complex.
Jon Andrews and 2 other Tax Specialists are ready to help you
Customer: replied 8 years ago.
thank you very much...appreciate the info