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Old 09-08-2014, 10:59 AM
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ROBS and asset sale

Hello:

Five years ago took advantage of a program to rollover 401k to a PSP/C-corp (ROBS). Sold contract assets from c-corp in June 2014. Proceeds went to c-corp. They are taxable. Would like to reduce taxes and/or defer them. Seems like my options are, one or both:
1. W2 wages to self as expense to offset taxes in c-corp; would need to pay personal taxes

2. Use proceeds to purchase another business, real estate investment or financial investment; all under c-corp;
Question: For option #2: would the "expense" of the purchase of other items offset the tax liability (ie decrease the taxable amount)? or is a purchase in this sense not an "expense" item?

thanks



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Old 09-08-2014, 04:43 PM
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Join Date: Oct 2010
Posts: 5,231
Quote:
Originally Posted by gchagrin View Post

2. Use proceeds to purchase another business, real estate investment or financial investment; all under c-corp;
Question: For option #2: would the "expense" of the purchase of other items offset the tax liability (ie decrease the taxable amount)? or is a purchase in this sense not an "expense" item?

thanks
I guess it depends; you need to satisfy some requirements; the business you are looking to fund must be an operating business , e.g., a retail or etc, not a passive-investing business ,e.g., a company setup for day trading stocks. Also only rollover funds from non-Roth fund sources qualify for funding the C-corp. Only a C-corp may be used in the ROBS transaction; therefore, other entity types such as an S-corp, LLC, partnership and sole proprietorship may not be used in the ROBS arrangement.The purchase of employer stock must be for adequate consideration (i.e, the 401k profit sharing plan must purchase the employer stock at fair market value). You must capitalize, rather than deduct, some costs. These costs are a part of your investment in your business and are called capital expenses. Capital expenses are considered assets in your business. There are, in general, some types of costs you capitalize.Business start-up cost;Business assets



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