Selling a Construction Company: The WIP Schedule Test
In a contractor sale, the work-in-progress schedule decides the price. A buyer will rebuild it from the job files, test every percentage-complete estimate against actual cost incurred, and convert any optimism into an earnings adjustment. On a business valued at a multiple of earnings, a single overstated job can cost far more than it ever earned. Contractors know WIP matters for their bonding company and their bank; very few realize it is the first thing a buyer takes apart. This guide explains why WIP is the whole ballgame in a contractor sale, why the same cost-to-complete estimates drive the tax return under Section 460, the look-back method almost no seller raises, exactly what a buyer tests job by job, how a WIP adjustment becomes a multiplied price adjustment, and the preparation that changes the outcome before diligence begins.
The 13-Week Cash Flow Model Lenders Actually Want to See
A thirteen-week cash flow model forecasts money in and money out, week by week, for one quarter ahead, built from actual receipts and payments rather than from accounting profit. Lenders, acquirers, and turnaround advisers ask for it by name because it answers the only question that matters under pressure: will there be enough cash in the account on the day the payment is due. Most businesses hand over something else, a monthly budget, a profit forecast, a cash flow statement derived from projected net income, and all three routinely get sent back. This guide explains why thirteen weeks and why weekly, what belongs in the model, how it differs from the forecasts you already have, why the variance analysis is the actual product, the five mistakes that get a model rejected, and why the real output is not the ending cash balance but a date.
Buying a NJ Cannabis License: The 280E You Inherit
When you acquire a New Jersey cannabis operator you are not just buying inventory and a lease. In an equity acquisition, you are buying the seller’s Section 280E position for every open tax year, and if they computed cost of goods sold aggressively, that exposure can arrive with the keys. Diligence on a cannabis target is a different job from diligence on any other small business, and the difference is almost entirely tax. Most buyers price the license and the location; very few price the tax history. This guide explains why 280E changes everything about cannabis diligence, what a buyer actually inherits under each deal structure, how to reconstruct and quantify the cost-of-goods-sold exposure, the regulatory layer that stretches the timeline, and how the April 2026 federal rescheduling now splits the analysis between qualifying medical activity and adult-use.
The Self-Rental Rule and the Grouping Election Explained
If you own the building your company operates from and rent it to that company, the self-rental rule treats the rental income as nonpassive while leaving any rental loss passive. You are taxed on the profitable years and suspended on the loss years. Where the rental and the operating business satisfy the Section 469 grouping requirements, often including the same-proportionate-ownership test, a grouping election may eliminate the mismatch, and it has to be made correctly and consistently. This affects a large share of owner-operators in Bergen County, because buying the building you work in is a standard wealth-building move, and almost nobody is warned about the rule before they do it. This guide explains what the rule says, who it hits, why so many owners end up caught without warning, how the grouping election fixes it, the consistency and disposition traps, and where the whole thing shows up on your return.
Rollover Equity: How the Second Bite Is Actually Taxed
Rollover equity is the portion of your sale proceeds you reinvest into the buyer’s new company instead of taking in cash, typically ten to thirty percent. The upside is real: a second bite of the apple when that company sells again in a few years. But the second bite is not a smaller slice of the business you just sold. It is a junior, leveraged position that pays out only after the buyer’s preferred return is satisfied, and that changes what it is worth in ways most sellers never model. This guide covers the economics and the second-exit tax of that rolled stake: where it sits in the capital stack, what it is actually worth on day one, what the second bite has to clear before it pays anything, and how it compares to an earnout or a seller note. For the mechanics of how a rollover defers your tax at the first closing, see our companion guide on how rollover equity defers your tax.
NJEDA Incentives for Developers: Aspire, Brownfields, Historic
Most of what a developer reads about taxes is about what a project will cost. This is about capital you can pull into a project. Through the New Jersey Economic Development Authority (NJEDA), the state offers a suite of incentives that can close the financing gap on a project that would not otherwise pencil out. The headliner is Aspire, a gap-financing tax credit for mixed-use, transit-oriented development, worth up to $42 million for most projects and 50% of eligible costs up to $60 million in enhanced areas. Alongside it sit the Brownfields Redevelopment Incentive, a $100 million program of transferable credits for remediating contaminated sites (currently paused pending new rules), and the Historic Property Reinvestment Program for rehabilitating landmark buildings. This guide walks through what each program does, the eligibility and equity requirements, the caps, the current application status, and how these state incentives interact with federal depreciation and interest planning.
Asset Sale vs Stock Sale: The Tax Tradeoff for Sellers
When you sell your business, whether the deal is structured as an asset sale or a stock sale can change your after-tax proceeds by six or seven figures, even when the headline price is identical. In a stock sale you generally report one layer of long-term capital gain. In an asset sale, a chunk of the price is taxed as ordinary income, up to 37% federally, through depreciation recapture on equipment plus inventory and receivables, and if you operate as a C corporation the gain can be taxed twice. Sellers favor stock sales for the capital-gains treatment; buyers favor asset sales for the stepped-up basis and liability protection. This guide takes the seller’s side of the table: how each structure hits your proceeds, why a C-corp asset sale is taxed twice, how the tax gross-up turns the difference into price, and how New Jersey, which taxes the gain as ordinary income up to 10.75%, changes the math before you sign a letter of intent.
Quarterly Estimated Taxes for the Self-Employed (NJ 2026)
If you’re self-employed or earning 1099 income, you generally have to pay quarterly estimated taxes, and for 2026 your third-quarter payment is due September 15, 2026. No one withholds tax from a contractor payment or a business distribution, so the IRS asks you to pay as you go, four times a year, using Form 1040-ES. You generally need federal estimated payments if you expect to owe at least $1,000 after withholding and credits; in New Jersey the trigger is much lower, more than $400, so plenty of NJ residents who are fine federally still trip the state requirement. The amount is not just income tax: net earnings from self-employment also carry self-employment tax of 15.3% on 92.35% of net profit. This guide covers who has to pay, the 2026 due dates, how to calculate the payment (with a worked $100,000 example), the federal and New Jersey safe harbors that take the penalty off the table, the annualized income installment method for uneven income, how New Jersey treats the self-employed differently, and the 2026 OBBBA changes worth building into your estimates.
Short-Term Rental Tax Loophole in NJ: The 7-Day Rule
If you own a short-term rental and have significant W-2 or other active income, the “short-term rental tax loophole” is one of the few strategies that can put a large deduction against that income, and after a change in the law last year it’s worth more than it has been since 2022. The mechanism: if the average period of customer use at your property is seven days or less, the activity isn’t treated as a rental activity for passive-loss purposes under IRC §469. If you also materially participate, the losses it generates are generally non-passive, which means they can offset salary, business income, or a spouse’s wages. Pair that with a cost segregation study and 100% bonus depreciation and a single property can produce a six-figure first-year deduction. But two things matter before you count the savings: clearing §469 isn’t the last hurdle (basis, at-risk, and excess-business-loss rules still apply), and New Jersey doesn’t follow the federal result, it misses in two separate places. This guide covers the seven-day and material-participation tests, how cost segregation and bonus depreciation multiply the benefit, the limitation stack, the two NJ catches, the audit-documentation requirements, and what happens to these deductions when you sell. Written by Stephen Calvo, CPA, a Big Four alumnus and Partner at TC Advisors.
Step-Up in Basis & Purchase Price Allocation (M&A)
In an acquisition, the headline price is only half the story. What the deal actually costs a buyer after tax is decided by three levers: how the deal is structured (asset vs. stock, and the elections that can turn a stock purchase into an asset purchase for tax purposes), whether the buyer gets a step-up in basis, and how the purchase price is allocated across the assets acquired. Pull those levers correctly and a buyer captures years of additional depreciation and amortization deductions, often worth a meaningful percentage of the price in present-value terms. Pull them carelessly and you pay more after tax for the same business. This guide covers all three: why structure drives basis, how a step-up is monetized through 100% bonus depreciation and 15-year §197 amortization, how to get a step-up even in a stock deal (§338(h)(10), §336(e), F reorganization, §754), how §1060 allocates price across seven asset classes on Form 8594, and the two New Jersey rules out-of-state buyers routinely miss, including NJ’s decoupling from federal bonus depreciation. Written by Stephen Calvo, CPA, a Big Four alumnus and Partner at TC Advisors.