What to do if my business is closing and I want to keep my company-owned vehicle?

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What to do if my business is closing and I want to keep my company-owned vehicle?

Do I have to buy it from myself? I’m selling the assets.

Asked on April 1, 2013 under Business Law, Tennessee

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

If the company is not an LLC or corporation, you don't have to buy it--you would seem to already own it, since the company did not have any independent existence and therefore could not own assets. So if the company was a sole proprietorship, for example, even if the company paid for the vehicle, it presumbly is already titled in your name.

If the company was an LLC or corporation, then yes, you'd have to buy it from the company if the vehicle is titled in the company name; this is legal, so long as there is nothing in the company's formation or operating agreements which prevent transactions with the company's owner(s). Depending on the price you buy it at, there may, of course be tax consequences for you and the company (e.g. if you get it below market value, the difference may be considered income to you, since you are receiving an economic benefit); and if you do not purchase the vehicle for market value, then if any other creditors bring some action to recover payment, they may be able to undo or reverse the transaction as one that was not a fair, arms-length transaction, but rather essentially an attempt to shield an asset from creditors.


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