Forced ownership, on the other hand, may include the grant of restricted stock, non-qualified stock options, or incentive stock options.
Ultimately, as more and more ownership is purchased (given), it’s entirely possible that a greater percentage of one’s net worth becomes concentrated in a single equity position (anti-diversification*) and the risk of major gain and loss likely increases.
The winding up of your company for Corporation Tax purposes normally starts on whichever is first: At the start of your company being wound up, your current Corporation Tax accounting period comes to an end and a new accounting period begins.
This begs the questions, at what point is it best to unwind a concentrated equity position?
Furthermore, what is the best strategy to diversify* a large allocation of company stock into other holdings?
When it comes to preparing your business for sale, there are several aspects of your company you begin to evaluate to ensure you’re minimizing tax liabilities and maximizing the transaction proceeds.
A common area often overlooked by many business owners is assessing whether your current corporate structure is the right fit for a business sale.
There may be Corporation Tax consequences for your company if it’s sold as a going concern.
You are selling the shares in your business for the market value of the business as a whole.
Distributions to the shareholder are not included in the shareholder’s gross income to the extent that the distribution does not exceed the shareholder’s basis in the stock.
Because the tax consequences of distributions depend on the shareholder’s basis, it is important to keep up with changes in the shareholder’s basis over time.
If your company or organisation ceases trading or business activity, closes down or is forced to close down, you may still have to file Company Tax Returns and pay Corporation Tax during the closing or winding up process.
If your company is in the process of being wound up, it’s still subject to Corporation Tax paying and filing requirements.
A buyer will almost always favor an asset sale, because they are able to step-up the tax basis in the assets to the purchase price, which then reduces the future taxes, due to being depreciated at the new stepped-up value.