5). Leno Hardware is owned and operated as a sole proprietorship by Larry Leno. The location is excellent, and he is approached by a buyer, Hard Bargains Inc., a national chain of hardware stores. What are the tax consequences in the following situations? Larry sells the store for cash. Larry sells the store for marketable stock in Hard Bargains. Larry incorporates the store and exchanges the stock for shares in Hard Bargains. Same as (c), but Larry incorporated his hardware store two years earlier.
5). Leno Hardware is owned and operated as a sole proprietorship by Larry Leno. The location is excellent, and he is approached by a buyer, Hard Bargains Inc., a national chain of hardware stores. What are the tax consequences in the following situations? Larry sells the store for cash. Larry sells the store for marketable stock in Hard Bargains. Larry incorporates the store and exchanges the stock for shares in Hard Bargains. Same as (c), but Larry incorporated his hardware store two years earlier.
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter18: Comparative Forms Of Doing Business
Section: Chapter Questions
Problem 35P
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Question
5). Leno Hardware is owned and operated as a sole proprietorship by Larry Leno. The location is excellent, and he is approached by a buyer, Hard Bargains Inc., a national chain of hardware stores. What are the tax consequences in the following situations?
- Larry sells the store for cash.
- Larry sells the store for marketable stock in Hard Bargains.
- Larry incorporates the store and exchanges the stock for shares in Hard Bargains.
- Same as (c), but Larry incorporated his hardware store two years earlier.
Expert Solution
INTRODUCTION
When the situation arises to sell your business where the buyers are around the corner, the seller may meet a proper tax bill. Careful computations and transactions are needed while winding up and selling off the business with responsible tax abiding taxes. The seller will be taxed on the gain or profit he/she make from selling the business.
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