What is the difference between an asset sale and stock sale?

Asset sale: buyer purchases individual assets; seller pays tax on each asset's gain at applicable rate (ordinary for inventory/equipment, capital for goodwill). Stock sale: seller sells shares; all gain taxed as capital gains. Buyers prefer asset sales for stepped-up basis; sellers prefer stock sales for capital gains treatment.

How is goodwill taxed on business sale?

Goodwill is a capital asset taxed at preferential long-term capital gains rates (0/15/20% plus 3.8% NIIT for high earners). This is why sellers often prefer to maximize goodwill allocation in the purchase price allocation (Form 8594).

What is an installment sale for business?

Spreading payments over multiple tax years allows reporting gain proportionally each year (installment method). Reduces the impact of selling in a high-income year. Limitations: depreciation recapture must be reported in year of sale; dealer property disqualifies.

US Tax Planning for Business Sale: Capital Gains vs Ordinary Income Calculator

Calculate total tax on business sale: allocation between goodwill (capital gains), equipment (1245 recapture), real estate (1250 unrecaptured), inventory (ordinary income), and customer lists. Asset vs stock sale comparison.

Principal ($)

Annual Rate (%)

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Compounding / Year

$ Finance Disclaimer: These calculators are for educational and illustrative purposes only. Results do not constitute financial advice. Consult a licensed financial advisor before making investment or borrowing decisions.

How to Use

Enter the values for the scenario you are assessing. Calculate total tax on business sale: allocation between goodwill (capital gains), equipment (1245 recapture), real estate (1250 unrecaptured), inventory (ordinary income), and customer lists. Asset vs stock sale comparison. Use the business sale tax planning result to inform your calculation.

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US Tax Planning for Business Sale: Capital Gains vs Ordinary Income Calculator

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Frequently Asked Questions

What is the difference between an asset sale and stock sale?

How is goodwill taxed on business sale?

What is an installment sale for business?