I want to gift my business to a family member

[scorp]

I have a small home based business, that I am tired of running now.

My daughter and son in law have said they will take it over.

They have set up a new DBA to run it, and I want to close my business down, but gift everything within the business to them. (Small amount of stock, office equipment, packing supplies, etc)

What are the implications? Can I do this?

Thanks in advance

[tmerrill]

This is definitely possible. The legal and tax implications depend on the entity of the business. For example, if your business is a sole proprietorship than your transfer of the business is considered an asset sale and you only have to pay tax on the assets of the business being transferred. I recommend you see an accountant and a lawyer to find out how to do this in the best possible way. You don't want to start your daughter and son in law off on the wrong foot.

[BP Writer]

A little more info would help - your handle is "scorp", is your business set up as an s-corp? LLC? Sole proprietorship? How much would you (conservatively) say that the assets you want to gift are worth? Does the business have liabilities on the balance sheet?

[scorp]

Sorry, no the business is a sole proprietorship, scorp is a nickname.

There are no liabilities, all have been met, sales tax, taxes, all vendors invoices are all paid in full.

6 years of steadily growing business, with a customer base of over 4000 right now.

Assets, probably $15,000.00- $18,000.00 at a guess, but assets are only worth what you can get for them if you decide to sell. I could throw everything in the trash, and be done with it all, so why wouldn't I be able to gift it to whomever I please?

I just don't want there to be any negative implications for them

[BP Writer]

I'm not a CPA and a very brief consult with one would be a good idea but I think you are in good shape. You can gift up to $13,000 per year to somebody without incurring gift tax (or reporting it to the IRS) - I'm pretty sure once you do a little spreadsheet you will find the total market value of those assets will be less than $13,000. It would be a good idea to write a brief letter to your daughter saying that you are "gifting her the stuff on the attached schedule". She would just file that away in the unlikely case that some auditor should ever come auditing. Again, a CPA should be able to confirm this for you with just a quick phone call.