Does personal goodwill have any other uses other than for reducing taxes?
June 1, 2008
Q: Does personal goodwill have any other uses other than for reducing taxes?
A: Yes, personal goodwill has use in other areas. Personal goodwill is used in divorce proceedings where the business owner has built a business during the course of a marriage. Upon dissolution, courts will examine how much of the “goodwill” contained in a business is attributable to the owner based upon personal relationships of the owner and other factors. Conventional goodwill of the company is generally a marital asset subject to division per the discretion of the court or statute. The personal goodwill, on the other hand, is generally not a marital asset and that can play into the favor of the business person/divorcee who holds the personal goodwill.
When Is The Right Time To Sell Your Business - Part 3
June 1, 2008
June, 2008 Op-Ed Article
WHEN IS THE RIGHT TIME TO SELL YOUR BUSINESS – PART 3
THE CURRENT WINDOW OF OPPORTUNITY
Some experts have observed that several trends have converged to create a uniquely attractive window of opportunity for those business owners who would like to sell their business.
First, they note that about 250,000 businesses are transferred through sale, inheritance, etc. each year, and this annual “demand” is expected to remain fairly constant for the foreseeable future.
Second, due to the aging of the Baby Boomer generation, the number of businesses available for sale is expected to grow to 500,000 per year beginning in about 2010. As supply begins to exceed demand, selling prices will begin to fall.
Third, tax rates on capital gains are currently at record low levels, but most observers believe these rates will likely go up –perhaps dramatically — as early as mid-2009, depending upon which party comes into power in January.
Lastly, though much has been written about the current “credit crunch” and resulting economic slowdown, the truth is that: (1) interest rates are still lower than they have been in 40 years, and (2) banks still have plenty of money available to finance the sale of fairly priced businesses.
The combination of low interest rates, low tax rates, and balanced supply and demand is creating a more favorable climate for the sale of a business today than may exist for another 10-15 years, according to many observers.
If you know of a business owner who’s thinking of selling or buying a business and who might benefit from a free consultation with us, have them contact me, or any of the M&A professionals at www.bradwaygroup.com
Mike Ertel, CBI, M&AMI
The Bradway Group
813.299.7862 Direct
© 2008, J. Michael Ertel, PA
A search of the Internal Revenue Code reveals that the term “personal goodwill” is not mentioned anywhere in the code. Is personal goodwill a legitimate way to reduce taxes from the sale of a C Corporation?
June 1, 2008
Q: A search of the Internal Revenue Code reveals that the term “personal goodwill” is not mentioned anywhere in the code. Is personal goodwill a legitimate way to reduce taxes from the sale of a C Corporation?
A: Absolutely. The Internal Revenue Code does not contain terms such as “personal goodwill”, “Solo 401(K)”, and many other terms that are commonly used as devices to reduce taxes for taxpayers. The term “personal goodwill” is a term that grew out of case law starting with The Martin Ice Cream Case. Since this case, personal goodwill contracts have become a commonly used vehicle to avoid unnecessary taxes.
