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My closerd comany has capital gains . Can I sell Co. to another

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My closerd comany has...
My closerd comany has capital gains . Can I sell Co. to another Co. that needs it to cover its gains as a lostl
Submitted: 5 years ago.Category: Tax
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Answered in 16 minutes by:
8/3/2012
Tax Professional: Phillip B, EA, Enrolled Agent replied 5 years ago
Phillip B, EA
Phillip B, EA, Enrolled Agent
Category: Tax
Satisfied Customers: 704
Experience: Practicing since 2004. Expert in 1040, small business, represent vs. IRS, & int'l tax mattters.
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Thanks for using JustAnswers!

Let me make sure I understand your situation.

Is the closed company being sold for a capital gain, or does the closed company have capital gains from other operations before it was closed? Are you trying to use company B's capital losses against closed company's gain?

Are the two companies S-Corps, C-Corps, LLCs, Partnerships, or Sole Proprietorships?
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Customer reply replied 5 years ago
Please call Joe XXXXXXXXXX
Tax Professional: Phillip B, EA, Enrolled Agent replied 5 years ago

Unfortunately, I cannot call.

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Customer reply replied 5 years ago
closed co. has tax credit of 300k. CO B has cap gain of 300k can B buy Co A and take advantage of A tax credit
Tax Professional: Lev, Tax Advisor replied 5 years ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,622
Experience: Taxes, Immigration, Labor Relations
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Hi and welcome to Just Answer!

If the company is a separate business entity (like corporation) and it is already closed - all tax credits and deduction which were carried over from previous years are lost - and may not be transferred to another entity.

 

Also if the company is a separate C-corporation - shareholders generally may not use credits and deduction from that corporation.

So if the company B purchases shares of corporation A - tax credits may be used only by corporation A to offset future taxable income.

However - as you stated - your business entity had already being closed - that means all unused tax benefits are lost.

 

If you have C-corporation and do not close it - you may sell shared of that C-corporation and all tax credits and deduction will stay with that corporation.
So - new owners will use these tax benefits against future income earned by that corporation, but still tax benefits may not be transferred to owners simply because there are shareholders.

 

Let me know if you need any help or if your circumstances are different.

Please be sure to ask for clarification if needed.

.

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Lev
Lev, Tax Advisor
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