How to handle Sale of Business
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How to handle Sale of Business

I have a rather complicated (to me anyway) question about the sale of a business which I was a LLC partner in.

I started the business in the early 2000's.   Around 2009 I sold 51% of the business to a partner.  The original entailed the creation of a completely new LLC with the old LLC being dissolved.  The partner paid me cash for the 51% of the old business and I contributed my remaining 49% to the new LLC (value pegged at the valuation of the business in 2009).  This contribution was noted and tracked in my capital account in the new LLC.

I paid taxes on the money I received in 2009 for the 51% as a long term capital gain (I had held the LLC since around year 2000.  

Fast forward to early 2018.  Another company bought 100% of the LLC that was created in 2009.  I was paid in cash again for my remaining 49% which had risen in value since the deal in 2009.  When I did my taxes, I paid capital gains on what I received in cash in 2018 minus the value in my LLC capital account (which I looked at as my cost basis in the new LLC).  

Does this all sound correct?

1 Reply
Level 3

How to handle Sale of Business

That sounds logical and correct to me. Well done!

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