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Old 05-12-2017, 01:06 PM
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C Corp worth more dead than alive?

I founded a software company in 2011. Since then we have been injecting huge amounts of capital into it from our other business, a dental practice. The software company (c-corp) has made no money. Because it is a C I haven't been able to right off those losses. If the company fails will I be able to declare a loss losses and count those against my other business? Would selling the stock I own at a lower price work?



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Old 05-15-2017, 12:39 PM
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I founded a software company in 2011. Since then we have been injecting huge amounts of capital into it from our other business, a dental practice. The software company (c-corp) has made no money. Because it is a C I haven't been able to right off those losses. If the company fails will I be able to declare a loss losses and count those against my other business?===> it depends; yes aslongas you file consolidated corp return. it may be offset against the income of its subsidiaries (if any) if a consolidated return is filed, carried back against past income, or carried forward to reduce future income. However if theother biz is separate biz then no as you can claim ther nOL onyour C orp return onyour 1120. If your business has more expenses than income during its tax year, then you may have a net operating loss. This loss can be used to offset income in other years
Since your business is organized as a C corp, any NOL it suffers provides no tax benefit to the shareholders UNLIKE an S corp or MMLLC. Such a loss can only be used by the corp itself: A corp can normally carry a net operating loss back 2 years and forward 20 years.

Would selling the stock I own at a lower price work?=======> An NOL is not transferable. The NOL does have a value. If you were to sell the stock in the corporation the new owner may be able to use the loss sometime in the future. However, when a corporation has a 50% or more change in ownership, the use of the Net Operating Loss is limited. With this limitation, most buyers will only place a small value on this item.
Because of this, it may better to sell the assets of the the corporation rather than the the stock. If you sell the assets, you will be able to offset any income you receive from the sale against your NOL carryover



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