Selling a small to medium-sized business is a complex venture, and many business owners are not aware of the tax consequences.
FASB CLARIFIES THE DEFINITION OF A BUSINESS AND SIMPLIFIES THE GOODWILL IMPAIRMENT TEST
As thoughts turn to the tasks to be accomplished in 2017, it may be helpful to recap what topics were covered in 2016, as well as touch on the Valuation newsletter focus for 2017. As you are working on strategic planning for the year, you may find it useful to reference these topics.
IRC Section 2704 Update
As discussed in last month’s newsletter, proposed changes by the IRS to Section 2704 of the Internal Revenue Code would increase taxes for many family businesses. The proposed regulation would effectively eliminate valuation discounts when transferring or gifting ownership interests to family members. As currently written, the regulation would impose a de facto 25 to 50 percent “stealth” tax increase on each transfer or gift, and severely hamper many of these businesses.