Question by tonka: What are CA taxes on selling a small business to just pay off business debt?
We own a auto repair shop in CA and just want out for what we owe on it (40K). If we sold it to one of our employess for the incrued debt, would we still have to pay taxes eventhough we wouldn’t be walking away with any profit? We do not own the property-just the goods. Thanks for any advise
Answer by Spock (rhp)
you’ll need to calculate the cost of the goods that’ll be purchased, plus any cost you incurred in starting the business, and the remaining tax value of any capital assets included in the sale.
the difference between what you get for it [relief from the debt] and the cost is taxable income.
can’t imagine it’ll be very much, possibly even negative [which is a deductible capital loss up to $ 3,000 per year].
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