Daily Archives: July 12, 2017

M&A Shop Talk: Tax Planning Using One-Day Note Concept Application

An S Corporation selling shareholder should always evaluate whether the “one-day note” obligation planning concept will achieve federal and state tax optimization objectives of an asset sale transaction arrangement. There are some exceptions to applying this concept due to business reasons or overriding tax regimes, beyond the scope of this blog.

The current tax provisions of the one-day note tax calculation require that the pre-liquidation calculated tax basis of an S Corporation selling target, following the consummation of an asset sale transaction, should be allocated between the cash and non-cash liquidation components respectively. Accordingly, the selling shareholders will immediately recognize the …read more

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