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News and advice from our small-business Web siteBye-Bye, Tax Break

Slipped into a little-noticed bill, a new U.S. law governing business sales closes a loophole that for years favored small-business owners. The law requires business owners that use the accrual method of accounting to pay capital-gains taxes at the time they close the sale of their companies, even if they receive payments over an extended period.

Here's the logic: Under the accrual method, businesses account for a transaction (purchase or sale) when it's formalized--not when the money actually changes hands. The same logic is supposed to apply to their taxes: They pay taxes or claim a deduction in the tax period when the deal is inked, even if no cash has been transferred yet. Yet business owners had been allowed to pay capital-gains taxes over time on businesses sold on an installment basis--even if they used the accrual accounting method.Get 'Em While You Can

To hear business-school officials talk these days, you'd think their grads are chucking their consulting and finance careers and heading to Internet startups in droves. Well, not exactly. In a survey of 18 of BUSINESS WEEK's top 25 B-schools, 42% reported that the top career choice among second-year students continues to be management consulting. At 32% of the schools, finance jobs are the first choice.

So how can small companies recruit these young workers, especially when the recruiting programs at most are still designed to funnel students to big companies? One approach is not to play the recruiting game at all, but to use the school's entrepreneurial incubators and business-plan competitions to make direct, year-round connection to the students.

For the full stories, click Online Extras at frontier.businessweek.comEdited by Dennis Berman


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