Can you give an asset in lieu of cash when selling a small business?
December 31, 2012 4:56 PM Subscribe
When selling a small business, can the owner accept an asset of the company in lieu of cash payment?
posted by miit to work & money (9 answers total)
The company is a California S-Corp with one owner. The owner has been diagnosed with a terminal illness and would like to transfer ownership of the company to his two employees. He does not seek to turn any profit and wants to make sure that neither he, nor the new owners, take on a tax burden in the deal. The company is a consultancy and basically breaks even or turns a very small profit each year. No debt or other liabilities. The value could be estimated anywhere from $0 to $750k (which is basically the owners current salary at a 4x multiple). The company owns a vehicle that's worth about $10k. So, can a stock sale agreement basically say the car will be given as payment for the company. Also, if it makes any difference, the owner will have an employment agreement with the company as long as he is alive to offer advisory services with a salary.