Capital Gains PainNew legislation hurts both buyers and sellers of businesses.
Opinions expressed by Entrepreneur contributors are their own.
Entrepreneurs trying to sell businesses are running intoproblems, thanks to legislation passed by Congress in 1999 at theClinton administration's behest. Now, because of heatedprotests about the bedeviling bill, Congress has uttered an"oops" in the form of a House bill reinstituting use ofthe installment method for accounting for the income earned fromthe sale of a business.
Last year's Ticket to Work and Work Incentives ImprovementAct requires S and C corporation owners to pay a capital gains taxupfront when they sell their business, if they're accrual-basistaxpayers and regardless of when they received proceeds from thesale. Bank lending is typically unavailable to a buyer, whogenerally takes a loan from the seller. The installment methodallows the seller to record those loan repayments as he or shereceives them over a period of years.
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