Baker Donelson writes that a recent U.S. Tax Court case reminds us that the personal goodwill owned by the principal shareholder/employee can provide significant tax planning opportunities. Generally, the sale of assets by a “regular” corporation (i.e., not a “pass through” entity, such as an ‘S’ corporation or a limited liability company) and the liquidation of the corporation to distribute the sales proceeds to the shareholder(s) generates exposure to two income tax events – the first being the sale of assets by the corporation when the tax is paid by the corporation; and the second being the liquidating distributions to the shareholders when the tax is paid by the shareholders.

via Goodwill Owned by a Shareholder Can Provide Tax Planning Opportunities | Baker Donelson – JDSupra.

Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.