When you put your company up for sale, there are two ways a transaction can occur: a sale of stock or a sale of assets. A sale of stock is a relatively simple transaction. As long as you have held your stock for 12 months, you are going to get capital gains treatment on the entire purchase price on your stock. A sale of assets is a different kind of transaction, and there are significant tax differences related to a sale of assets versus a sale of stock. You have a recapture of depreciation. You have assets that when they are purchased from you, you’ll have ordinary income on part of it and capital gains on part of it. Each type of asset is calculated differently on a sale of assets transaction. It is very complex. You need to get some good advice on how to do it from your attorney and your accountant. By the way, the difference in price between a sale of assets in terms of how you allocate the assets versus a sale of stock can be as much as 30%. It is an important issue for you to think through before you start entering a transaction to sell your company.

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