C to S Conversions

One of the big questions business owners have to answer when considering incorporating their business is whether to classify it as a C corporation or an S corporation.To avoid double taxation of profits, many advisors recommend that their corporate clients switch to S corporation status. Doing so, however, requires the assets of the entity to be re-valued. A business valuation that determines the value of the company’s goodwill at the time of conversion may provide support for the built-in gains (BIG) calculation that is required should the entity sell within 10 years after conversion.