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Machinery and Equipment Appraisal for C Corp to S Corp Conversion

December 22, 2011

The new year is almost upon us, and you may be considering incorporating your business in 2012. When making this decision, you’ll have to determine whether you’ll classify your business as a C corporation or an S corporation, which may also be known as a subchapter S corporation. The way you classify your corporation will impact the way it is taxed. C corporations pay both state and federal taxes on earned income, and the corporation’s shareholders pay taxed on dividends earned, which is called double-taxation. In an S corporation, the business itself pays no income taxes, but the business owners, or the shareholders, pay taxes on the company’s profit. 

A C corporation could realize significant tax savings by converting to an S corporation. Of course, any major decision like that should be discussed with a tax advisor. When considering the merits of C corp to S corp conversion, your accountant will consider the value of your business, which includes all business assets. Before  completing the conversion, business assets, including machinery and equipment, must be appraised by a certified appraiser so that there’s an accurate record of the corporation’s value on file. 

The NEBB Institute endorses and strives to observe the highest standards of professional ethics to preserve the public trust inherent in the professional appraisal practice. The Institute provides initial and monthly comprehensive education, ongoing support, and a dynamic international network, and certifies professionals in the art of machinery/equipment appraisal and brokerage. 

By: NEBB Institute


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