Tax implications of LLC being sold mid year

There is not enough information in this for anyone to give you an accurate opinion and, if someone does, they don’t know what they’re talking about.

The LLC is taxed as an S-corp. No sale date is set yet as we are waiting on some more things but just trying to get a basic understanding before we get a lawyer involved.

Example with 6/30 sale date. If from January through June there is 0 net income then from July through December there is 20,000 net income. Is the tax liability split 50/50 end of year based on the time as owner?

The legal/closing documents should already address this. If they don’t, you need your attorney & CPA to get on it before you start signing things in a few weeks

As said, I'll refer to myself as not knowing and you need an accountant before you move forward.

But if you sell it and are 100% done, why would you as the seller be responsible for income taxes on revenue earned AFTER your sale unless that's outlined in the sale itself?

Furthermore, if someone else buys it why would they be responsible for income taxes before the sale was complete?

quote:

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Thanks guys. Yes talked to a couple accountants we know that aren’t necessarily specialized in business but ended up coming out with more questions than answers. Just trying to educate myself a little before really getting into the thick of things. No set sale date so it can be pushed as much as we need. Thanks again

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You need to also understand that just because your business sale is dates as 12/31 does not also mean that you pay 100% of the year and owe nothing the following year.

Your sale documents should contain language such as this:

The parties agree that on and after the Effective Date, the distributive share of Seller in the Company’s income, gain, loss, deduction or credit with respect to the Transferred Membership Interest was, or will be, determined based on an interim closing of the books on the Effective Date under applicable sections of the Internal Revenue Code. Seller shall be responsible for any and all tax liabilities relating to its ownership of the Transferred Membership Interest prior to the Effective Date, including, without limitation, its proportionate share of the Company’s income, gain, loss, deduction or credit through the Effective Date as reflected on the Schedule K-1 to be issued by the Company to Seller for the 2024 federal and state income tax returns.

This is just an example and not intended to be legal or accounting advice. You should seek the advice of your own legal and tax specialists for language to address your specific situation.