misrepresenting a sale of a business

[suziek]

What is the name of your state? California
I bought a business one year ago. We bought the business at 70,000 based on the information that the owner gave us, tax return of 120,000 and daily reciepts for 2 months(her best month year to date).I have owned the business for one year and am tring to sell for health reasons. I have lowered the sale price to 55,ooo and even at this price people say it is not worth the price. The sales in the store are 6,000 to 8,000 but no where close to the 12,000 to 15,000 per month as was stated on the seller tax return. Customers tell me I am busier than she ever was. I have incresed and improved the business in one year. I cannot sell the business for anything near what I paid because of daily sales are too low. My question is: The tax return and depreciation of the business shows the previous owner made monthly totals of 12,000 to 15,000 a month What consitutes misreprentation when selling a company and what chance do I have for sueing on grounds of misrepresentation of sales for a business. I tried to sell with a broker and his legal department stated I may have sufficent ground of fraud. Your opion? or advise

 

[HomeGuru]

What is the name of your state? California
I bought a business one year ago. We bought the business at 70,000 based on the information that the owner gave us, tax return of 120,000 and daily reciepts for 2 months(her best month year to date).I have owned the business for one year and am tring to sell for health reasons. I have lowered the sale price to 55,ooo and even at this price people say it is not worth the price. The sales in the store are 6,000 to 8,000 but no where close to the 12,000 to 15,000 per month as was stated on the seller tax return. Customers tell me I am busier than she ever was. I have incresed and improved the business in one year. I cannot sell the business for anything near what I paid because of daily sales are too low. My question is: The tax return and depreciation of the business shows the previous owner made monthly totals of 12,000 to 15,000 a month What consitutes misreprentation when selling a company and what chance do I have for sueing on grounds of misrepresentation of sales for a business. I tried to sell with a broker and his legal department stated I may have sufficent ground of fraud. Your opion? or advise

**A: the last business that I bought, I had my CPA review all financial documentation including verifiying the monthly income and expenses with the bank statements. If you based your decision to purchase soley on a review of the tax returns of the business, how can you be assured that the returns are correct and are copies of the ones actually filed with the State and IRS?

 

[Cyn Workman]

Hi There,
I am going through the same thing right now with an attorney later this afternoon. Exact scenerio. But, my papers state that the tax returns I received are true copies filed with the IRS etc. and that all information deemed to be true and correct!!!Check and see if your paperwork says that. I will let you know what my Attorney says later today/tomorrow.
It will be fine! Once you face the issues as I finally have.
CW

 

[Cyn Workman]

Hi,
My attorney is sending a "Demand" letter asking for certified copies of filed IRS tax returns from the CPA my customer works with. Since they have moved out of state he said that even if we prove fraud it will cost us a good amount of money to collect. But, at least for me I may not end up paying the balance of the note.
In your case it may be easier for you to collect. See an Attorney right away.