A purchase and sale agreement is a legally binding contract that specifies how a partner`s stake in a company can be reallocated if that partner dies or otherwise leaves the company. In most cases, the purchase and sale agreement provides that the available share is sold to the remaining partners or the partnership. Choose one: a. Life insurance premiums used to finance a repurchase agreement to buy and sell are tax deductible for a corporation, but not for a partnership or individual The purchase and sale agreement requires that the share be sold to the corporation or other members of the corporation on a predetermined basis. Purchase and sale contracts are often used by sole proprietorships, partnerships and private enterprises to facilitate the transfer of ownership when each partner dies, retires or decides to leave the business. In the event of the death of a partner, the estate must accept the sale. For example, the agreement may prevent owners from selling their interests to external investors without the consent of the remaining owners. Similar protection may be granted in the event of the death of a partner. Which of the following statements is true with respect to purchase and sale contracts? A typical agreement could involve selling the interests of a deceased partner to the remaining business or owners. This prevents the estate from selling the interest to a foreigner. When you are logged into your account, this website remembers the cards you know and the ones you don`t, so they will be in the same box the next time you log in.

In addition to the majority stake in the company, purchase and sale agreements specify the funds to be used to assess the value of a partner`s shares. This can be useful apart from the issue of buying and selling shares. For example, in the event of a dispute between the owners about the value of the business or the involvement of a partner, the valuation methods included in the purchase and sale contract will be applied. b. As part of a cross-buy-buy-sell agreement, the company undertakes to acquire the commercial interest upon the occurrence of the triggering event. The purchase and sale agreement is also called a purchase-sale agreement, a buy-back agreement, a company will or a business prenup. Purchase and sale agreements are designed to help partners handle potentially difficult situations in a way that protects the business and their own personal and family interests. Partners must work with a lawyer and an auditor when drafting a purchase and sale agreement. To ensure that funds are available, business partners usually purchase life insurance from other partners.

In the event of death, the proceeds of the policy will be used to purchase the shares of the deceased. Some partners opt for a mix of both, with some parts being purchased by individual partners and the rest being purchased by the partnership. To see how well you know the information, try the quiz or test activity. Use these flashcards to memorize information. Look at the big map and try to remember what`s on the other side. Then click on the card to return it. If you know the answer, click the green Knowledge box. Otherwise, click the red Don`t know box. If you entered seven or more cards in the Don`t know box, click Retry to retry those cards. c.

If a corporation pays premiums on a policy held by one shareholder during the life of another shareholder, that payment may be considered a dividend. If you need a break, try one of the other activities listed under the memory cards, such as .B. Matching, Snowman, or Hungry Bug. Although you feel like you`re playing a game, your brain is always making more connections with information to help you. If you accidentally placed the card in the wrong field, simply click on the card to remove it from the box. d. If a shareholder dies, the policies of the other shareholders will be included in the estate of the deceased for federal inheritance tax purposes You can also use your keyboard to move the cards as follows: If a sole proprietor dies, a key employee can be named as the buyer or successor….