• FreeAdvice has a new Terms of Service and Privacy Policy, effective May 25, 2018.
    By continuing to use this site, you are consenting to our Terms of Service and use of cookies.

Questions .... Questions.....Questions...lol

  • Thread starter CvilleBilliards
  • Start date

Accident - Bankruptcy - Criminal Law / DUI - Business - Consumer - Employment - Family - Immigration - Real Estate - Tax - Traffic - Wills   Please click a topic or scroll down for more.

C

CvilleBilliards

Guest
What is the name of your state? Virginia

Commercial Property Appraised: $400,000 (6 Years Ago)
Since then a Chevy Dealership & a new apartment complex have been developed. Currently waiting for a new appraisal. It should come in around $500,000+. It is a pretty good location and has room for expansion. It is around 5,000 sqft and 12 years old. It is in very good condition.

Company Equipment:
· 10 Brunswick Gold Crown Billiard Tables: $25,000 (From The 1995 U.S. 9-Ball Championships.)
· Stock (Cues, Cases & F & B): $3000
· Kitchen & Bar Equipment: $5,000

Currently Operating about $5,000 above Cost of Overhead each month over the past 2 years. The current owners are operating as an LLC. They have not really tried to improve the business over the years. They just micro-manage the company and keep it real simple. I want to purchase the company and make upgrades in the F & B to create a steady follow of business. Use my Billiard Leagues & Tournaments to generate new business as well. The leagues & tournaments (With Pro Players & w/o) create a buzz and ensure nightly events.

They are offering the place to me for $425,000 after working on the price. I do not have good credit so finding the funds for the down payment makes it hard. So I have contacted some Local Bar Owners in town that might be interested in putting up the funds. But I have the feeling they might try to squeeze me out of the picture. Greed is everywhere I know that now (lol) but the current owners said that if it happens they would give me two weeks to match the offer. So now that I have tried to put a million words into a couple paragraphs (lol). Here comes the questions….:)

1) What would be the Capital Gain Taxes for them selling the business & property for $425,000?

2) If a lender wanted $42,500 down for a loan on the property & business @ $425,000. Is it possible to get the $42,500 for the current owners and get a loan for $470,000 (If the appraisal comes back above $500,000). Then the down payment would be $47,000. Use the $42,500 from the owners and my own $4,500 to make the required $47,000. THEN pay them $425,000 for the property & business and give them back the $42,500. Would they LOSE money on the $42,500 in taxes if so how much?

Breakdown:

Loan: $470,000 ~ Business & Property
Down Payment ~ $47,000

Current Owners ~ Give me $42,500 to help get it financed. I guess we would not tell the bank this part...lol.(Perhaps a closing cost loophole? I have no idea.) (They will be getting the money right back..)

My Own ~ $4,500

= $47,000 (For The Down Payment on a $470,000 loan)

Will the Taxes kill them for doing this with the extra $42,500? If so how much? Is it legal?

True Amount For Selling The Property & Company: $425,000
After they help me with the $42,500: $470,000

Please forgive me I know how to make a business successful. But my knowledge of taxes & financing are VERY VAGUE.

If you have any suggestions please reply. I can only hope it is in time.

Thanks,
Rookie….(lol)
 
Last edited:


mykoleary

Member
I'm still looking for the LEGAL question.

I see lots of tax, business and accounting questions, but nothing relating to law...
 
C

CvilleBilliards

Guest
lol...Then I guess it is legal to get $42,500 from the current owner and use my $4,500 to make the $47,000 needed to get the loan amount of $470,000.

I just thought that perhaps that was not legal.

Thanks,
Rookie
 

mykoleary

Member
Sounds darn near spot on what those "free grant programs for new home owners" do.

To give the buyer a $5000 grant, they have the seller raise the selling price and then give that money to the buyer. Remember though that the money from a higher price will cost you incrementally more in the long term due to compounded interest...
 
C

CvilleBilliards

Guest
That makes sense about the grants.

I wish there was another way aroung it. But I do not want to lose out on the deal over $40,000. The property alone could rent for $5,000+ a month if my business fails.

I just wish I knew the tax difference on the two amounts.($425,000 & $470,000).

Thanks for the insight. Can I have a million dollars? Just KIDDING.....unless you are willing....lol...lol

Really Thanks,
Rookie
 

Find the Right Lawyer for Your Legal Issue!

Fast, Free, and Confidential
data-ad-format="auto">
Top