Challenges Of Selling An S Corporation

By Stephen Ziobrowski and Andrew Wogman (June 30, 2017, 11:08 AM EDT) -- Many businesses — from small to large — have elected to be treated for tax purposes as "S corporations." S corporations generally are taxed on a flow-through basis. That is, they do not incur an entity-level tax. Prior to the rise of limited liability companies (LLCs), which are also taxed on a flow-through basis, S corporations were the preferred means for obtaining both flow-through taxation and limited liability from a corporate law perspective.

There are downsides, however, of being an S corporation. In particular, the tax law imposes numerous inflexible requirements on entities qualifying as S corporations. When it comes time...

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