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All's Fair in . . .the Law?

A change in taxation legislation makes selling a business a better deal.

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This story appears in the March 2001 issue of Entrepreneur. Subscribe »

There's good news for entrepreneurs who want to sell their companies using the installment sale method of accounting. Congress passed and President Clinton signed legislation that reverses the consequence of a previous law that unfairly restricted the method's use.

Under the earlier law, business owners who sold their businesses were required to pay capital gains taxes on the entire selling price, even if they hadn't actually received the money from buyers who were paying off the purchase in installments. Under the change, sellers will only have to pay taxes on the money for their business in the year it's actually received.

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