Accountants....question for you

Member resources:

Frequent asked questions:

What is Searchfunder.com?

Searchfunder.com is an online community of searchers, investors, lenders, brokers and other professionals. Over 80% of those involved in searchfunds maintain a Searchfunder account to help them network, hire, and mentor others.

What are the benefits of membership?

In addition to accessing the most active online network of business buyers, Searchfunder licenses research that is simply not cost effective for individuals. Access over 15,000 industry reports and 50,000 transaction financials. You also get monthly credits for contact information for your company sourcing campaign with the option to purchase more at drastically discounted rates. Searchfunder has pre-purchased access from these data providers in order to empower individual buyers and to help searchers level the playing field versus private equity.

Do you have deals?

While we are primarily a buy-side network, we do have hundreds of brokers that regularly post deals to the community.

Can I find an internship on Searchfunder?

Absolutely! We have the industry's largest intern job board. If you are considering a search, the first step is to help another business buyer so you can hit the ground running.

What does it cost?

Searchfunder is a subscription service. We offer flexible monthly, annual and lifetime memberships.

Monthly

$79 / month

Annual

$19 / month

Lifetime

$432 / once

Those who maintain an account with us for over 4 continuous years are permanently added to the community without the need for a membership.

Do I need an MBA to join?

While a large number of our members come from dedicated programs at Harvard Business School, Stanford GSB, Chicago Booth, and other top programs, searching is no longer reserved for the elite. With the current abundance of dry powder in private equity, and an increasing number of business owners reaching retirement age, good deals rarely go unfunded.

Post a question, deal, job, etc...

Make a post...

Complete registration to post.

by a searcher from University of Pennsylvania - The Wharton School
in Miami, FL, USA

2yrs ago

Accountants....question for you

Hello!

I was speaking with a seller who just last week bought out her 50% partner (her sister). Involves real estate + OpCo.

Seller told me that, as part of the deal, she agreed not to sell the business for 2 years bc it would provide tax benefits to her sister (her former partner).

I have not heard of anything like this, but would not be surprised if there was something in the tax code addressing it.

Can anyone provide any colour?

Thank you!

1 Like

193 Views

reply by a searcher 2yrs ago
from University of Texas at Austin in Lexington, KY, USA

In laymen's terms, if they OP buys at a higher price then the sister sold for, then the sister's selling price would have to be adjusted higher for tax purposes, correct? Even if she never receives more compensation?

reply by a searcher 10mos ago
from Western Governors University in York, PA, USA

I know this is an old post, but I wanted to expand on the previous answer given. With related-party sales, if the relative seller sells within 24 months, then the sale is essentially decreed to have been from the prior related party and the seller to the new buyer (both sisters in this case). The sister would then have to declare that income on her tax return and pay taxes on money that she never received. The 24 months is not a hard-set date, but generally 24 months after the related-party transaction, the IRS stops tracking and enforcing as hard, as there is only a three-year SOL for those that have filed their returns timely and accurately. There is a six-year look-back for certain types of transactions from specified parties, but without more details, I don't know if this would apply to this situation. On the flip-side, any losses from the sale to a related party are also disallowed, so if the seller bought the business from her sister at a loss and then the current seller sells it at a gain, the other sister would be able to take the loss against the amount that the sister would have received under their prior partnership. However, the current sister owner generally does not legally have to pay the other sister as they were already bought out and have exited. It's just that the IRS will treat the other sister as though she was never bought out if the sale is within the restricted time-frame. Perhaps the current owner sister overpaid her sister for her share deliberately and then plans to sell after the restricted time-frame is up so she (seller) can claim a loss? I'm not entirely sure what she means about the exiting sister getting tax benefits from leaving a closely held business. There aren't really any tax benefits to selling a business to a related party. Gain is considered ordinary income, taxable at up to the highest bracket, losses are not allowed, and selling again to an unrelated party means the prior related party is essentially penalized. *Disclaimer: This is not legal tax advice. Tax law implementation varies for each situation, and if you require tax advice, please contact your Enrolled Agent, or, if they specialize in taxes, your Certified Public Accountant or tax accountant.