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Selling a family biz? Protect your write-offs

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in Small Business Tax,Small Business Tax Deduction Strategies

If you're selling your share of the family-owned business, you have plenty of reasons to offer relatives, who are current owners, first shot at buying your portion.

If your brother or sister already runs the operation, you can keep full ownership in the immediate family. What's more, you can leave your sibling with a tidy tax present.

Strategy: Stay within tax-law boundaries following an ownership shift. If your company is a C corporation that has been operating at a tax loss, your smart moves now can preserve future net operating loss (NOL) write-offs under the "family-attribution" rules. Otherwise, the write-off may shrink substantially.

Family-attribution rules can become a thorn in your side (see box below, left). Triggering the rules treats you as owning shares of stock that are actually owned by another family member, such as your child or your spouse. That's usually not good. (The tax law, in such case...(register to read more)

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