Tax Facts

I—Disability Buy Out Cross Purchase Agreement

A disabled owner/employee cannot be carried for very long in a small business; hence the logic of a disability buy-out arrangement. In a typical agreement, if an owner/employee becomes totally disabled for a period of six months, on the first day of the seventh month the disabled owner/employees stock is sold to the non-disabled shareholders.

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Cross References - Concepts Illustrated

Cross
Purchase Agreement

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