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Deferred Tax asset is a GAAP thing, not tax.
Sounds like the sale of the boat is business income to which the NOL can be applied. Ans selling for 2 million implies there is cash with which to pay tax.
Deferred Tax asset is a GAAP thing, not tax.
Sounds like the sale of the boat is business income to which the NOL can be applied. Ans selling for 2 million implies there is cash with which to pay tax.
No.
Unused losses could potentially be part of a Deferred Tax Asset for GAAP financial statements but otherwise they do not go on the balance sheet as Anna said. Protocol wise, it is appreciated when people say thanks.
" ... And we'll ask the company that's buying us"
So, this isn't a client?
I suggest, especially in light of the amounts involved, that professional help be sought (and not via the internet).
And we'll ask the company that's buying us to allocate $400k as non-compete clause. Then utilize the suspended losses to offset the $400k. Does this make sense?
Generally no under §1060. You can't alter characters of the income by arbitrarily allocating sales proceeds to non-compete by selling the assets at less than FMV.
As my friends suggest, you should engage a competent tax professional to assist you with this transaction. There is obviously more to this than the initial information you provided in your two posts.
You do need to get outside advice. In your two posts you ahve said the losses are susoended due to basis and they are due to an NOL.
If the sale of the boat generates business income, 1231 gain and ordinary inome recapture, it increases basis and allows suspended loses to be used,
I question the wisdom of creating $400K ordinary income out an otherwise low(er) taxed 1231 gain. Also.who is doing the selling/noncompeteing? S Corp or shareholder?
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