Business Sale: Who Owns Professional Goodwill?

When a professional corporation sells its assets or liquidates, one important tax issue is whether the corporation or the shareholder-employees own any appreciated professional goodwill (with a fair market value in excess of tax basis). So, who owns professional goodwill — the professional corporation or the shareholder-employees in it? For tax purposes, the answer can make a big difference when a professional corporation is shut down. In this article, we'll explain why it matters and how you might want to plan in advance of a sale or liquidation to help ensure the best possible tax results.