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MZ2R
New Member

Sale of my business to my son

Should i sell it to him for fmv or $1

2 Replies
pk
Level 14
Level 14

Sale of my business to my son

@MZ2R ,  unable to answer  because "should" is  dependent on many other things.

From tax perspective -- you may want to consider two different pricing point -- 

(a) Book value  --- selling at this price would guarantee  NO gain or loss for you.  However, for the buyer  ( if not at arms length ), it may be tantamount to gift of the difference between  FMV and book value ( if a positive / gain situation)

(b) FMV  -- may constitute a gain for the seller  and no restrictions on the buyer.

(c) any price less than FMV will always  mean a gift  to the extent  FMV is above the Book Value.

 

Does this general answewr satisfy your query ?

 

Sale of my business to my son

should is your choice. but the following rules apply.. if your tax basis is greater you get no tax deduction for the loss. if FMV is greater and over $16,000 you have to file a gift tax return. 

as to his situation

the tax basis of the shall be the same as it would be in the hands of the donor (you) except that if such basis  is greater than the fair market value of the property at the time of the gift, then for the purpose of determining loss the basis shall be such fair market value. 

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