TaxTMI 
TaxTMI 
If a sole proprietor having its business as a builder desires to convert his business into a Pvt Ltd company. At what values should the closing stock of land be transfered to the company ? If it has to be tfd at market value, the will it amount to taxable business income for the sole proprietor. The sole proprietor will get more than 50% shares of the new company. Can the sole proprietor get salary from the company later.
Conversion of sole proprietor into company
05 Feb 2013 
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Conversion exemption on sole proprietorship to company requires transfer of all business assets and share-only consideration.
To obtain capital gain exemption on succession of a sole proprietorship by a company, all business assets and liabilities immediately before succession must become the company's assets and liabilities; the proprietor must hold not less than fifty percent of total voting power and retain that shareholding for five years; and the proprietor must receive no consideration or benefit other than allotment of shares. The closing stock of land must be included among transferred assets to satisfy the conditions. (AI Summary)
To obtain capital gain exemption on succession of a sole proprietorship by a company, all business assets and liabilities immediately before succession must become the company's assets and liabilities; the proprietor must hold not less than fifty percent of total voting power and retain that shareholding for five years; and the proprietor must receive no consideration or benefit other than allotment of shares. The closing stock of land must be included among transferred assets to satisfy the conditions. (AI Summary)