1. Tax Aspects of Selling Your Business Bradley S. Dimond, CPA Henry & Horne, LLP February 3, 2011

2. Overview Assumptions

3. Tax Aspects

4. Legal Structure of Business Sole Proprietor (or SMLLC) LLC (Multi Member) S Corporation C Corporation

5. Tax Result from Sale – Why it Matters Sale of Assets or Equity LTCG v. Ordinary Income Section 1231- Gain almost but not quite = LTCG Ordinary Income Recapture Purchase Price Allocation

6. Tax Results from Sale – the Results by Entity Form Sole Proprietor (SMLLC) = Asset Sale MMLLC = Asset Sale (for all intents and purposes) S Corporation – Choice and flexibility –Section 338(h)(10) election –Purchase Price Allocation C Corporation –Downside of double taxation –Who has negotiating leverage –Desire not to purchase contingent liabilities 6

7. Other Considerations Non-compete Agreement? Personal Goodwill Installment Sale –Recapture issue –$5 million rule Charitable or Estate Planning –CRT? – converting LTCG to Ordinary Income –Income of gain shifting – Current gifts of equity –GRATs –Other

8. Other Considerations Contingent Liabilities Key Executives/Shadow Equity Contingent Purchase Price/Earnout 8

9. Other Tax Related Concerns Due Diligence –Representations re current on tax filings –Property Taxes (personal and real) –Payroll Taxes –Sales Taxes –Unclaimed Property Escrow/Hold Back 9

10. Summary 10

11. Thank You!