When Alice and David* first reached out to our team at Dahl Law Group, they were unsure about the impending sale of their successful restaurant and the real estate it sat on. After decades of building their business and owning the commercial property where the business operated, they needed an alternative legal opinion to make sure they were making the right decisions for both their financial future and their family.
Despite working with a business broker and a CPA previously, they didn’t feel confident in the tax advice they were receiving. This uncertainty is what led them to seek our help, and we quickly identified areas where we could save them a significant sum in the process.
Making the Right Decisions About Business Sale Structures
Alice and David’s situation was more complicated than it appeared on the surface. The real estate they owned was held in a C-corporation, and their business, though previously taxed the same way, had recently elected S-corporation status in preparation of the sale. They had already negotiated the sale of the restaurant as an asset sale based on advice from their business broker, but they didn’t realize how much this decision would cost them in taxes.
Dahl Law Group’s team stepped in and immediately recognized that the transaction as structured would trigger a significant built-in gains tax. We provided Alice and David with rough calculations, which revealed a tax burden of nearly $300,000 if they proceeded with the sale as planned. This news came as a shock, but we knew there was a better way to structure the deal. By negotiating the sale to be a stock sale rather than an asset sale, we were able to cut down their tax liability drastically — saving them over $250,000 in the process.
Protecting Clients Beyond the Sale
Beyond the tax savings, Dahl Law Group played a critical role in protecting Alice and David’s interests throughout the transaction. We worked closely with them to draft enforceable agreements that would shield them from potential lawsuits after the sale closed. One major challenge was handling the demands of David’s cousin, a silent partner in the business. This family member insisted on receiving an immediate return on his investment, making negotiations complicated.
By running a detailed analysis of his payout, we were able to quickly calm his concerns and secure his cooperation. In addition, we negotiated a reserve fund to cover any unforeseen costs, including taxes, lawsuits, or other post-closing expenses. This extra layer of protection gave Alice and David peace of mind as they moved forward with their next venture.
Looking Ahead with Confidence
Now, with their successful business sale behind them, Alice and David are focusing on their next project — purchasing another business with the funds they earned. They are retaining Dahl Law Group as they move through this process. Our team is working closely with their CPA to ensure that future investments are structured in the most tax-efficient way possible while keeping them legally protected.
If you’re thinking of selling your California business and want to ensure you’re making the most financially sound decisions, contact Dahl Law Group at our offices in Sacramento and San Diego. Our experienced legal team will guide you through every step of the process, helping you save money, reduce risk, and protect your financial future.
This is a fictional retelling based on the true experience of Dahl Law Group clients.
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