|
Mistake #6 -
Selling to a son or daughter
We never recommend
selling to a son or daughter, but it's probably the approach
most favored by the Federal Government. When you sell to a son
or daughter, the government has a chance to tax the same money
three separate times:
-
Your son or
daughter will probably use profits from the business to buy
the business from you. The purchase payments aren't tax
deductible. First the government takes their cut, and then
you'll get paid.
-
As you receive
purchase payments from your son or daughter, you'll pay
taxes on the profits of the sale.
-
In many cases,
a large part of the sale proceeds will remain in your
estate. At the time of your death, the government then gets
a third chance to tax the same money.
We aren't saying
that a son or daughter shouldn't be the next owner, if they have
the ability to be successful. But Centering has always been able
to develop better ways than an outright sale to transfer the
business to a son or daughter while reaching the personal
financial goals of the owner.
|
