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Re: LLC - Change tax from sole propriertorship to S-Corp Feb 23, 2009 7:48 AM
The value is what you could sell the assets for including goodwill on the date of the conversion.
That is not what you would get in a liquidation, but if I were to buy your business that day, what would I pay you?
Fixed assets might go for more or less than book value. Those could be built in gains or losses.
I pray to the tax gods that there is no real estate in the new S Corp.
If you are cash basis, do you have unrealized receivables that won't be counted in income until cash is collected? Those are built in gains.
If you are accrual, but haven't written off bad debts, those are built in losses.
If the business name would allow you to sell for more than the sum of the assets, that is goodwill, a built in gain. If you have any purchased goodwill, that could be a gain or loss.
However, payables and debt get subtracted out.
Feel free to contact me for help. This is not a simple task. Where is your accountant on all this? Good luck.
