Tax treatment of selling shares in C-Corp converted recently from LLC.

David Simic Founder @moringasci, ex-Stanford.

Last updated on May 14th, 2018

I am wondering about the tax treatment of selling shares in a C-Corp that was recently a LLC (less than 6 months prior).

Let's say the LLC is three years old, and the conversion to C-Corp was done less than 4-months prior.

Would sale of the shares be treated as long-term capital gains or short-term?

If short-term any clever way to structure a sale so as to ensure long-term capital gains treatment?

The buyer is primarily interested in acquiring the asset, which they would pay for in installments over 3 years, but the buyer seems to prefer acquiring all or most of the C-Corp instead of just the asset (but is open to either way depending on what is most tax-efficient for the seller).

I am finding partial answers to these questions googling around, but nothing that nails it for me, and possibly outdated given the 2017 tax reform.

Any help, even if orientative, would be much appreciated!