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Hello goons, I am trying to buy a couple of retail stores from my current employer. I live in Texas, and my current boss has offered to sell his stores to my brother and I for a little less than $1 million. Working with a business advisor provided by my city, I have worked out a business plan, a financial plan, and set up a business account with the IRS. My father in law is good with investing around $150k for a business loan to buy the business. My trouble comes from corporate: they want new owners to have $100k cash separate from the business loan for the purpose of buying into the corporation (and refurbishing the existing stores I imagine). My FIL has two rental properties he wouldn't mind selling to invest into this new business venture, but he doesn't want to lose money to taxes. My brother and I have been working on this business plan for a year now and this hurdle has me worried it was all a waste of time. My questions are: 1. Is it possible for my FIL to sell his rental properties without incurring taxes if he invests (or becomes a partner) in my business? 2. Do I need to make my FIL a partner in my company? He is very risk averse and does not want to lose his retirement money at age 70 because of my business. I recognize I will almost certainly need a lawyer and tax person to help me, I'm mostly posting here to get any advice about this so I don't waste any more time or money. Thanks, goons!
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Feb 27, 2022 18:22
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| # ? May 1, 2024 00:34 |
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Are you actually getting assets or just buying goodwill? I would just start up retail from scratch and put your employer out of business the American way.
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Mar 5, 2022 03:49
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This is probably worth a call to a business-oriented CPA for both of your questions. I don't think he needs to be made a partner but you'd want an attorney to advise you on whether or not it's desirable and iron out a solid contract. If your FIL is able to do a cash-out mortgage on his rental properties or main home, that would be a way to avoid the cap gain taxes on selling the places. Also please please give us every single update on this if you decide to go through with it because it would be awesome whether you fail gloriously or manage to make it work!
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Mar 5, 2022 04:09
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Elephanthead posted:Are you actually getting assets or just buying goodwill? I would just start up retail from scratch and put your employer out of business the American way. We are getting assets, but a big chunk is goodwill. My brother and I have discussed opening a new store, but a big existing customer base is our main advantage in buying these old stores. Unless we're totally wrong? When I helped open a store for a different owner, it took probably 3 years for our customer base to develop to where I was happy with it. In our business plan, my brother and I were accounting for the customer base to try to reduce some goodwill. moana posted:If your FIL is able to do a cash-out mortgage on his rental properties or main home, that would be a way to avoid the cap gain taxes on selling the places. I was under the impression only a main residence was eligible for avoiding capital gains taxes, and figured if he sold his rental properties, he'd be subject to it. But a cash-out mortgage can avoid that? I should clarify: he owns these properties outright and has no mortgage on them. Would this still apply? Thank you so much for the help so far, I'll make sure to keep y'all updated!
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Mar 5, 2022 18:43
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Night Cat posted:I was under the impression only a main residence was eligible for avoiding capital gains taxes, and figured if he sold his rental properties, he'd be subject to it. But a cash-out mortgage can avoid that? I should clarify: he owns these properties outright and has no mortgage on them. Would this still apply?
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Mar 6, 2022 06:31
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| # ? May 1, 2024 00:34 |
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Night Cat posted:Hello goons, I am trying to buy a couple of retail stores from my current employer. Difficult to answer some of the questions here with knowing more about the business being acquired. Some of the statements seem contradictory. You indicated in one line you are buying stores, but in a different line you are buying into an existing corporation. Is this being structured as a stock acquisition or asset? When you indicated you are buying stores, are you literally buying the real estate or are you stepping into existing leases with a third party landlord? Some cities have opportunity zone areas that also allow for gain deferrals for equity investments in new businesses. Will your stores be located in any of the areas on this map? https://gov.texas.gov/business/page/opportunity-zones Moana's cash out mortgage isn't a bad idea but your FIL isn't going to translate 100% of the equity FMV into cash. Admiral101 fucked around with this message at 22:18 on Mar 6, 2022 |
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Mar 6, 2022 22:14
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