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Stock sale - closely held business (1 viewing) (1) Guest
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TOPIC: Stock sale - closely held business
#1768
chris (User)
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Stock sale - closely held business 4 Months, 2 Weeks ago Karma: 1  
I am working on a case where the seller wanted to sell his equity in his business as a stock sale and not an asset sale. As I understand it the reason is that the seller will not be burdened with as much tax at the sale. The issue is whether you can do a like - kind exchange with a stock sale?

I will do some research, I just wanted to see if anyone had experience with this?
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C. Lochen (User)
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Re:Stock sale - closely held business 3 Months, 3 Weeks ago Karma: 0  
From what i understand, a like kind exchange is structured as an asset sale, not a stock sale. To accomplish a Section 1031 exchange, there must be an exchange of properties (not stock). The simplest type of Section 1031 exchange is a simultaneous swap of one property for another.
Make sure you are aware of the time constraints of effectuating a 1031.

Are you doing the 1031 or someone else?
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ai1829 (User)
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Re:Stock sale - closely held business 1 Month, 3 Weeks ago Karma: 0  
Just to add to the last posts, stock sales are subject to capital gains, which are only 15%. So, its only costing the seller 15 cents on the dollar to sell the asset. Pretty cheap considering tax rates go up to 35%
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norton (Moderator)
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Re:Stock sale - closely held business 1 Month, 3 Weeks ago Karma: 0  
1031 exchanges are asset sales, they will not work with a stock sale because it is subject to different tax conseqences. Also not that a 1031 exchange requires a get deal of attention to details, the smallest thing can disqualify the transaction and you lose the tax benefit. I would not handle the 1031 itself unless you have somebody guiding you though it or have done it a couple of times before successfully.
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LK311 (User)
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Re:Stock sale - closely held business 1 Month, 2 Weeks ago Karma: 0  
There are law firms that handle this stuff exculsively, I suggest you use one of them. The smallests mistake is costly, and ruins the transaction. A couple of grand and you are covered.
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