Document Type

Article

Publication Date

1990

Abstract

This Article examines the impact of recent developments on a particular category of taxpayer: the S corporation whose shareholders desire to sell some or all of the corporation's assets. While an installment sale of assets has, for many taxpayers, lost much of its previous allure, such sales may still be commercially desirable under certain circumstances—e.g., where a buyer lacks ready cash or adequate borrowing power. In such a case, some S corporations may be able to achieve significant tax savings through proper planning and documentation of an installment sale. Until Congress or the Treasury provides needed clarification, however, the S corporation tax planner needs to be mindful of significant grey areas and traps for the unwary that exist under current law applicable to installment sales by pass-through entities in general, and by S corporations in particular. This Article explores a number of problem areas that S corporation tax planners will encounter in structuring asset sales for deferred payments. Where the similarities between S corporations and partnerships are relevant, the Article takes note of problems faced by a partnership in similar circumstances.

Publication Citation

39 Am. U. L. Rev. 915 (1990).

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