Bought the houses, moved the kids, still paid the tax

Two of my clients moved to Florida and still owed Maryland tax on every penny.

In this issue: how a sale becomes an asset sale for tax purposes even when the agreement says "Equity Purchase," what a residency audit actually checks (your dog's vet is on the list), and what we salvaged at the end of the year.

My clients had sold their business for more than $300 million - roughly $85 million of gains each. Two of the four owners bought $7 million houses in Florida, moved their kids, tracked their days out of Maryland with an app they built themselves. They thought they had saved $15 million.

Nobody asked the only question that mattered: the equity of what - the S corporation, or the LLC underneath it?

Because the buyer required asset treatment, every dollar of gain was Maryland-source - for residents and nonresidents alike. The move could not save what the deal structure had already decided. One phone call before the LOI would have said so. Before anyone bought the house. Before anyone picked the school.

No tax advice is better than bad tax advice.

Full story in the newsletter - link below.

My views, not those of Frazier & Deeter or Mobena. Not tax or legal advice; consult your own advisor.

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