Annuity vs Stock Swap


D

Dick Adams

Within the last few weeks, there were at least two threads
that covered selling a business or a patent for cash,
annuity, or stock. Here are some questions:

1. Can one sell/exchange a patent for bonds in the buyer's
company as a non-taxable event?

2. Can one sell/exchange a patent for stock in the buyer's
company as a non-taxable event?

3. Can one sell/exchange a patent for stock the buyer's
company is holding for investment as a non-taxable
event?

4. If yes, how is that different from selling an apartment
building for stock the buyer is holding?

5. If the seller of a business intends to treat the stock
received as an annuity, i.e., live off of the dividends
and the sale of shares, why is that different for tax
purposes from a guaranteed structure payment annuity
that cannot be liquidated or transferred?

Dick
 
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S

Seth Breidbart

Dick Adams said:
2. Can one sell/exchange a patent for stock in the buyer's
company as a non-taxable event?
One can create a new corporation and contribute the patent
to it.

The buyer's company can merge with that company in a
non-taxable stock transaction.

I have no idea whether there's a simpler way.

Seth
 
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S

Stuart Bronstein

One can create a new corporation and contribute the patent
to it.
Which is a tax-free transaction.
The buyer's company can merge with that company in a
non-taxable stock transaction.

I have no idea whether there's a simpler way.
It depends on the size, capitalization and ownership of the
acquiring corporation. But most likely your approach is the
simplest way.

Stu
 

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