TAX "GOTCHA" OF ASSIGNING ASSETS TO A C-CORPS?
Here is the situation:
1. A small e-commerce deal (bought for 3.57x SDE + inventory) came on the market and the key to the winning bid was speed. There is a health issue with the seller and we need to close ASAP-literally 8 days from 1st contact to close. We close Monday, 15 November.
2. 60% of the price is paid in cash at closing with remaining 40% as a 90 day seller's note.
3. There is a small amount of inventory on hand which gets bought from the owner at at closing, but a much larger amount will be paid directly to a vendor when it ships in a couple weeks.
Here is the complication: the 40% of the remaining money is coming from my 401K which I will access through a ROBS process. (If you are unfamiliar, ROBS stands for Rollover as Business Startups. You establish an independent retirement plan with the funds from your 401K which then buys the shares of a C-Corp you form. The corporation then has cash to use as startup or acquisition capital.) Unfortunately, finishing that whole thing will take too long (up to three to four weeks total).
My plan is to acquire the business as an individual and then assign the assets to the C-Corps after the ROBS is complete. This process is common in real estate says the broker, and my ROBS advisor doesn't seem worried.
From this point forward this business will operate as a little engine pushing cash into the retirement plan which will grow tax free due to also completing a ROTH conversion during the rollover. Well aware of the ROTH conversion tax and the C-Corps vs LLC tax implications and believe they are manageable in the long run all things considered. I'm keeping my W-2 for the time being.
My question (fear) is that somewhere I'm creating a large tax liability by the order of things. (closing as an individual then assigning assets post close).
Is there a big GOTCHA here that I'm not considering? I really don't want to have take a loan out to cover the seller's note....
Thank you for your consideration and advice.