WHEN A BUSINESS OWNER SELLS THEIR BUSINESS HOW ARE THEY TAXED?

I'm sure my question has a very long answer with a lot of nuance. What I'm trying to generally understand is how small business owners are taxed on the sale of their companies, especially those that are pass-throughs (LLCs, S-Corps). In other words, is the sale of a business subject to income tax, capital gains tax, both, neither, etc.?

Part of why I'm asking is to better understand how some proposed tax code changes will affect business owners pursuing a sale.



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