Sale of Company – Limited Liability Company (LLC)
Hypothetical Example
Tax Implications
| Sale of Assets LLC |
Sale of Shares | Sale of Shares with planning |
|||
| A. Sale of assets within Company | |||||
| Proceeds on sale of assets within company | A | 40,000,000 | |||
| Less tax basis of assets within company | (2,000,000) | ||||
| Gain on sale of assets within company | 38,000,000 | ||||
| B. Tax on income allocated to shareholder from LLC | |||||
| Taxable dividend to US shareholder | 38,000,000 | ||||
| Federal tax – personal tax (39.6% plus 3.8%) | (16,492,000) | ||||
| State tax (4.5% assumed) | (1,710,000) | ||||
| Total US Tax | B | (18,202,000) | |||
| C. Total Proceeds from sale of shares* | A | 41,839,000 | 41,839,000 | ||
| Cost basis of shares – nominal | – | – | |||
| Taxable Gain | 41,839,000 | 0 | |||
| A-B | |||||
| D. US tax – Individual tax on sale of shares | |||||
| Federal tax – personal tax (39.6% plus 3.8%) | (18,158,000) | 0 | |||
| State tax (4.5% assumed) | (1,883,000) | Possible | |||
| Total US Tax | B | (20,041,000) | LOW – if any | ||
| Effective Tax Rate | 48% | ||||
| After tax proceeds to shareholders / owner | A-B | 21,798,000 | 21,798,000 | 41,839,000 |
Proceeds needed in a taxable sale of shares to equal the after-tax cash on the sale of assets
All calculations are based on Biden Administration tax proposals
LOW TAX or FULLY TAX-FREE solutions to selling US businesses