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moldmakingtechnology.com 47 CONTRIBUTOR Michael J. Devereux II, CPA, CMP, is a partner and director of manufacturing, distribution and plastics industry services at Mueller Prost. FOR MORE INFORMATION Mueller Prost / 314-862-2070 mdevereux@muellerprost.com / muellerprost.com In this case, both S Corporations would be treated as one entity for Federal income tax purposes. One class of stock. A company may have only one class of stock and is treated as having only one class of stock if all of the outstanding shares grant identical rights to distribu- tion and liquidation proceeds. That is, each shareholder must receive their pro rata share of any distributions and their pro rata share of assets should the company liquidate. It is also noteworthy that S Corporations exercise a distinct set of voting rights, which is helpful to family-owned mold shops. For example, mom, dad or both can retain all of the voting shares, which enables them to retain control of the company and enables the kids to purchase or receive gifts of non-voting shares. Many times, this is done for estate planning purposes or as a means of succession planning. Many shops prefer S Corporations over partnerships because the ordinary income of an S Corporation is not subject to self-employment tax. And, owners of an S Corporation can be employees and receive wages, while partners must receive compensation through guaranteed payments or distributions of income. C Corporations Selling Their Business Shop owners looking to sell their business should weigh the pros and cons of an S Corporation. For example, many buyers wish to buy assets, rather than stock, because then they can amortize or depreciate the purchase price of the assets. When a C Corporation sells its assets, it will be subject to the tax that the C Corporation pays and to the tax that the shareholders pay upon liquidation. However, when an S Corporation sells its assets, the shareholders pay tax on the gain on the sale of assets, but they do not pay tax at the corpo- rate level unless a built-in gain exists and the sale of the assets occurs during the recognition period. Any appreciation that occurs after the S Corporation files avoids this "double tax." For C Corporations that are considering a sale in five years, the shortened built-in gain recognition period provides some relief. For a mold shop looking to sell within five years, a late S Corporation filing is possible if the company follows certain rules. All of this means that mold shops now have more flexibility in the way that they are taxed on their profits and in the even- tual sale or transition of their businesses. Precise "Rolling" Mold Alignment AGATHON Machine Tools, Inc 9 Parklawn Drive Bethel, CT 06801 Tel: 203-730-8741 mailamt@agathonusa.com New, Longer Round Fine Centering System • Permits pre-centering of mold halves • 50% longer centered travel on mold separation • Brass cage for better wear resistance • Rolling elements for high precision mold alignment www.agathon.com maintenance tracking MADE EASY. Drop-down Menus | Standardized Terms | Tech Tips Status Alerts | Powerful Reports | FREE TRIAL Simple-to-use maintenance software that gives you total mold control. NOW OFFERING: Mold maintenance training courses. moldtrax.com