Tax basics when selling a small trucking company
This is a general overview to help you ask your CPA the right questions. It isn’t tax advice, and your situation depends on how your company is set up and taxed.
How the sale is structured matters
Most MCDOT Sales deals are sales of the LLC’s membership interest or a corporation’s stock. See membership interest purchases. How that’s taxed depends on how your company is taxed:
- Single-member LLC (disregarded entity): the IRS generally treats the sale as a sale of the company’s assets.
- Multi-member LLC taxed as a partnership: generally a sale of a partnership interest, with special rules for some assets.
- S corporation or C corporation: a stock sale, generally taxed as a capital gain to the shareholder.
Common pieces of the tax bill
- Capital gains on goodwill and intangible value, such as the authority’s age and history. Long-term rates generally apply if you owned it more than a year.
- Depreciation recapture on trucks and equipment you depreciated, which is generally taxed as ordinary income.
- State income tax, depending on your state.
Questions to ask your CPA
- How will the price be allocated between equipment and goodwill, and how does that change my taxes?
- Is Form 8594 needed for this sale?
- Should trucks be sold separately?
- Does timing the closing across a calendar year help?
- What final returns and payroll filings does the company need?
Frequently asked questions
Do I pay capital gains when I sell my trucking company?
Often part of the gain is taxed as a capital gain, but depreciation on equipment may be recaptured as ordinary income. It depends on your company’s tax setup, so ask your CPA.
Does MCDOT Sales give tax advice?
No. We handle the sale process. Your CPA should advise on taxes.
Next step
Start with what your company is worth.
This guide is general information, not legal or tax advice. Have your own attorney review any purchase agreement.