LLC sale of intangibles - Spidell

LLC sale of intangibles

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Message Board LLC sale of intangibles

This topic contains 1 reply, has 2 voices, and was last updated by Lynn Freer 4 months ago.

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  • #170721

    A single member LLC (elected to be taxed as an S-Corp) is being sold.  Assets being sold consist of goodwill, covenant not to compete and customer list.  My understanding is that goodwill is considered capital gain and the sale of other intangibles would be taxed as ordinary income.  However, I am having a hard time finding specific guidance on this.

    Also, the member would like to sell as an installment sale.  Is that allowed in this type of situation and what would be the tax consequences?


  • #171194
    Lynn Freer

    These intangibles include the following items:
    •Blue sky.
    •Customer list.
    •Workforce in place.
    •Industry and company know-how.
    •Relationships with clients.
    •Going concern value.

    The gain on the sale ofintangibles is capital gains income to the sellers.

    This came from RIA with no other cites. Document Title:IMPROVE TAX CONSEQUENCES OF BUSINESS PURCHASE AND SALE, Practical Tax Strategies, Jan 2002
    Checkpoint Source:Practical Tax Strategies/Taxation for Accountants (WG&L)
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