Transactions & succession
In a sale or ownership change, the headline price is only the beginning. We examine what the proposed terms mean for the company, each participating owner and the tax work that follows.
Understand what the price means
The owners need to know more than the amount on the offer. They need to understand what is being sold, how and when the price is paid, which tax questions the terms raise and what cash they expect to receive after tax.
We review the proposed structure alongside the company’s records and the participating owners’ circumstances. That lets the tax consequences be considered while the terms are still being discussed, rather than first calculated after the agreement is signed.
The same headline, different cash
Suppose two offers state the same purchase price. One provides more cash at closing; the other leaves part payable over time and includes an amount dependent on later events.
Receiving a price over several years does not necessarily spread all of the tax over those years. Depreciation-recapture income may be reportable in the year of sale even when part of the price arrives later. For each offer, we place expected receipts beside the tax-payment timing and distinguish fixed payments from amounts dependent on later events.
The work on either side of closing
Before a transaction, the tax and accounting work can include reviewing company and owner basis records, comparing the proposed structure and payment sequence, and resolving discrepancies in the books. We identify the records and professional inputs needed to support the analysis.
After closing, the agreed work can include updating the accounts, reviewing estimated payments, preparing the relevant returns and retaining the basis and transaction records needed in later years. A transaction’s tax work rarely ends with the signature.
A family transfer has its own timetable
A transfer to the next generation may involve continuing income for the current owners, a gradual change in ownership and property that is held separately from the operating business. Those objectives should be understood before selecting a structure.
We examine the tax consequences of the proposed transfer with the family and its retained advisors. Where valuations or legal documents are needed, we coordinate the tax work with those inputs. This is different from assuming that the structure of an outside sale should also govern a family succession.
Work alongside the transaction team
Deal counsel handles the agreement and legal negotiations; valuation and financing professionals handle their respective work. Our contribution is the tax and accounting analysis for the clients we represent, including the differences between the company and its owners.
We agree the deliverables and the people who may receive them. Affiliated Hickok Tax Law, PC may be separately engaged for entity or trust documents where needed; those legal services are not part of the tax engagement.