Welcome to the site. I'm PDtax
, and saw your question. I'm not a tax attorney, but have worked with you before (in May 2013).
is already done, from the sounds of things. The assets
of value are the business name, permits, vehicles, and client relationships/customer list.
A new tax ID number will not be required just because of the change of ownership. That would not isolate the prior years anyway. He purchased 100% of the entity, and that includes the potential tax liabilities.
Keep in mind there should be a short period final C return
filed before the change of ownership anyway.
Since the company was a prior S, it should be able to elect S going forward with his consent for the short year ended 12/31/13.
You are asking how to protect your client from what sounds like a poor contract. Most contracts have indemnification clauses, or at a minimum, are specific to the liabilities included in the transaction. I assume yours does not.
If you are really concerned, you could use a new entity to claim the business assets, effectively stripping them out of the old entity. A name change (the New Eagle Truckers, or Eagle Trucking II), asset transfer as part of purchase (with bulk sale concerns). I have done these with an asset-for-asset transfer, for example. Exchange a note for the value of all the assets, and leave the note in Oldcorp. Establish guarantee terms that discount the value of the assets to compensate for the risk. Best to involve an attorney if you are extra concerned about the exposure.
Using the same name is easy, reformed. Eagle Transport II, Eagle Logistics, Inc., etc. are all similar to Eagle Trucking, Inc.
You might also be able to liquidate the old corp after asset transfer (likely eliminating any exposure to audits, since the entity will be liquidating/liquidated). Once liquidated, you could ask the Secretary of state for a dba to use the old name for your new corp.
Part of me wants to ask how bad the exposure is, since your client already signed his deal. Let me know if you want to cover any more specifics, or if this answered things for you.