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Intuit Laid Off 17% of Its Workforce — But the Real Story Is What It’s Building With the Other 83%

Earmark Team · July 7, 2026 ·

When 3,000 Intuit employees opened their inboxes at the end of May, the internet had already written the narrative for them: AI is coming for your job. But the three hosts of The Unofficial QuickBooks Accountants Podcast, one of whom survived two rounds of Intuit layoffs during his 18-year tenure at the company, have a different story to tell about what’s actually happening and what it means for every accounting professional who builds their practice on QuickBooks.

In Episode 146, host Alicia Katz Pollock joins Dan DeLong of School of Bookkeeping and Matthew “Spot” Fulton of Parkway Business Solutions to dissect CEO Sasan Goodarzi’s announcement that Intuit cut 17% of its workforce. As Alicia explains, “All three of us came on because we were like, oh, man, how are we going to talk about this?”

They concluded that this is a cyclical restructuring that reveals where Intuit is placing its biggest bets. Accounting professionals who understand the strategy behind the cuts will be better positioned to anticipate which tools, integrations, and support channels are evolving or disappearing.

Intuit’s Cyclical Restructuring Culture

To understand what these layoffs mean for your practice, you need to understand this pattern.

Dan lived through it twice during his 18 years at Intuit, and he watched restructuring cycles come and go with predictable regularity. The timing is practically baked into Intuit’s fiscal calendar.

“Intuit’s fiscal year starts on August 1st,” Dan explains. “The fourth quarter is when decisions like this get made, and the third quarter, which was the result of what occurred and why this happened, is typically a reflection of how well or how poorly TurboTax did, because the third quarter includes the tax filing season.”

When those Q3 numbers come in, they might be better than expected or “less than desirable.” Then the fourth quarter becomes adjustment season. Since payroll is a massive line item, restructuring follows. The previous round was two years ago. Before that, four years.

“Intuit is a very eco-friendly company because they recycle employees,” Dan joked.

When Dan got caught in the 2008 restructuring, he was on vacation, driving through Arizona on the way to Mexico. His phone rang in a town called Why, Arizona. He looked up and saw a giant fork in the road: turn left for Mexico, right for California.

“It was so fitting,” he recalls. “Why is this happening? And here I am in Why, Arizona.”

But Dan didn’t lose his job. He lost that job. Intuit opened new positions as part of the restructuring. Dan applied, and he never turned in his badge. The total headcount during Dan’s tenure stayed consistent at around 8,000 employees. As Dan points out, “Intuit hired more people than they let go” doesn’t make for a compelling headline.

While 17% of the workforce received letters, Dan emphasizes it affects everyone: “Even though it’s 17% of the workforce, it affects 100% of the employees.” The people who remain have to reorganize and absorb responsibilities. He remembers the person sitting next to him in 2018 asking, “Why are they letting you go? I just started here.” That same colleague was impacted in this latest round.

Taking Care of Their People

The hosts want to make one thing clear: Intuit takes care of the people it lets go. The severance package is substantial:

16 weeks of base pay, plus two additional weeks for every year at Intuit
Continued payroll through July during the transition
Bonuses and stock vesting honored
Six months of healthcare coverage
Mental health support during transition and 60 days after
Career coaching, resume help, and job placement assistance
Immigration support for visa holders

Dan maxed out the severance formula after 18 years. “I would have volunteered at that point,” he admits. But then he catches himself, remembering a young couple behind him at the announcement meeting, sobbing. What felt like a golden parachute to a veteran felt like a catastrophe to someone just starting out.

The hosts also challenge the stigma around layoffs. Matthew shares how a friend spent 15 years moving between companies, a pattern Matthew initially warned against. But each transition expanded her knowledge and increased her income.

“There’s only so much you can do with the annual merit increase,” Dan notes. “You’re going to give yourself a raise by having a period of time with this company and then moving on.”

Reading Between the Lines of Goodarzi’s Letter

Sasan Goodarzi’s restructuring letter is a strategic roadmap. Every rationale for cuts signals a shift that will affect the tools you rely on.

The priority was reducing management layers that were “slowing the flow of information.” They’re empowering teams closer to customers to make decisions without sending everything up the chain.

Dan experienced this firsthand. He was one of the few frontline employees authorized to approve his own data service escalations. “I could either bring the knowledge to the conversation, or I could skip the line,” he explains. That’s the streamlined decision-making Intuit wants more of.

The letter also talks about focusing on “high-impact work” and reducing “coordination-heavy roles” to focus on “mission-critical work that directly impacts our customers’ prosperity.”

Matthew raises the concern many are thinking: “I’m having this challenge or that challenge within the software. And now I’m hearing that you’re laying people off. Is it going to take longer to see things getting fixed?”

The hosts interpret this as potentially more investment in programming and support, though Dan admits, “We can hope, right?”

Strategic Signals in the Closures

Intuit shut down offices in Woodland Hills, California, and Reno, Nevada. But these weren’t random real estate decisions.

“Woodland Hills is pretty close to where I live, and that’s always been the merchant processing area,” Spot confirms. Dan adds that when Intuit acquired IMS, its payment processor, it opened operations there.

Reno housed payroll operations, assisted payroll, risk, and underwriting. Dan notes you can no longer purchase assisted payroll for desktop, so these closures are product-line signals.

Meanwhile, Intuit is opening a new facility in India, where they’ve maintained a significant development presence for years. The layoff numbers are global, not just U.S.-based. That detail often gets lost in media coverage.

The Three Big Bets (and One They’re Folding)

Intuit used to have five big bets. Now they have three:

Scale their AI-native platform for “done for you” experiences. This covers QuickBooks Live and TurboTax’s assisted services. But Matthew heard unsubstantiated claims that some layoffs hit QuickBooks Live directly. Alicia adds that Live was reportedly underperforming.
Be the center of money for consumers and businesses. Between QuickBooks Payments, Bill Pay, the QuickBooks Money app, a new credit card, short-term lending, and buy-now-pay-later features, Intuit wants to be the financial system businesses never leave. “Create a platform that people live in as much as humanly possible,” Matthew explains, “and they never want to leave it because once you’re really ingrained in it, it becomes that much harder to leave.”
Accelerate their authority in the mid-market. QBO Advanced and Enterprise Suite get the investment.

“Does that mean they feel they fully won the small market?” Matthew asks. The hosts think maybe. As Alicia notes, one Enterprise client is worth a dozen Simple Starts in revenue.

The MailChimp Question

This is where things got heated. Intuit’s Q3 earnings call described MailChimp as “a drag on growth.” The company “seems open to a potential divestiture.”

“If this is saying we are reducing MailChimp, I have a problem,” Alicia says. “I have an operational problem in my business because we literally have email workflows that have been in place for ten years.”

She argues the real failure isn’t MailChimp. It’s that Intuit never properly leveraged the QBO integration. You can build email segments from purchase data, but most people don’t know that.

“Quicken is still around, right?” Dan says, offering some perspective. “They sold it off. Another company bought it, but that brand is still around.”

The earnings call also revealed acknowledged churn in the SMB segment. Customers are trying QuickBooks and leaving, though mid-market growth currently offsets those losses.

The ProAdvisor Shift

Buried in the discussion is perhaps the most important development. Alicia shares intelligence from an internal Intuit meeting indicating that the company is rethinking ProAdvisors as customers rather than just a marketing channel.

“They’re realizing we are their customer because ProAdvisors right now are looking at alternatives,” Alicia explains. “And if they don’t actually treat us like we have value, then we’re gone.”

For years, Intuit viewed ProAdvisors as a channel. For example, one ProAdvisor brings 20 clients. Now they recognize ProAdvisors have inherent value. If this shift holds, it could reshape how Intuit prioritizes support, product development, and communication with the accounting community.

What This Means for Your Practice

The headline says 17% layoffs. The reality is closer to 83% reorganization. For accounting professionals, the practical takeaways are:

Watch your MailChimp dependencies. If your practice relies heavily on MailChimp’s QBO integration, start planning. A divestiture doesn’t mean the product disappears tomorrow, but having a contingency plan is smart business.
Lean into the mid-market. With resources pouring into QBO Advanced and Enterprise Suite, this is where the platform will evolve fastest. One Enterprise client generates more revenue than a dozen Simple Starts, and Intuit is building accordingly.
Hold them to the ProAdvisor promise. If Intuit genuinely sees ProAdvisors as customers, not just a marketing channel, it’s your moment to push for better support and tools. They know you have alternatives, so make sure they hear what you need.

As Alicia concludes, “Intuit is responsible for all of us pursuing our passions and building careers that we love. We want to continue to survive and thrive together as a team.”

For the complete conversation, including Dan’s unforgettable story about getting the call at a literal fork in the road in Why, Arizona, listen to episode 146 of The Unofficial QuickBooks Accountants Podcast.

Alicia Katz Pollock’s Royalwise OWLS (On-Demand Web-based Learning Solutions) is the industry’s premier portal for top-notch QuickBooks Online training with CPE for accounting firms, bookkeepers, and small business owners. Visit Royalwise OWLS, where learning QBO is a HOOT!

The Platform That’s Replacing QBO Accountant Goes Paid in August and Most Accounting Professionals Haven’t Logged In Yet

Earmark Team · July 7, 2026 ·

In Episode 145 of The Unofficial QuickBooks Accountants Podcast, hosts Alicia Katz Pollock and Dan DeLong break down Intuit’s May “In the Know” webinar, and the numbers they share are attention-grabbing. When Intuit polled attendees about its new Accountant Suite platform, 70% either hadn’t heard of it or hadn’t tried it yet. This is the platform that’s replacing what you log into every day, and most accounting professionals don’t even know what it does.

But before we dive into those platform changes, let’s start with Intuit’s big news: the ProAdvisor program you’ve known for nearly 30 years is getting a new name. Starting in 2027, we’ll all be “ProPartners” instead of ProAdvisors.

The ProAdvisor-to-ProPartner rebrand: What we know (and don’t know)

During the webinar, Intuit dropped this announcement with minimal fanfare. They’re rebranding the ProAdvisor program to the “Intuit ProPartner Accountants” program in 2027. They promise expanded benefits, more education, and a connected community, but specifics are thin on the ground.

“The ProAdvisor program has been around for almost 30 years, right? And that term is now no longer in their glossary of terms. And here we were just talking about being a Top ProAdvisor,” Dan said, capturing the community’s reaction perfectly.

Alicia shared her own confusion. “With all the leaning in on advisory over the last couple of years and then the push to include AI to help us do advisory, it seems like a ProAdvisor name would be more appropriate than ever.”

The hosts noted that Intuit has a habit of dropping these announcements early to let people “warm up” to changes over time. But as Dan reassured listeners, “The sky is not falling.” Intuit promises to enhance the program, not gut it. We don’t yet know exactly what the enhancement looks like.

Why Intuit Accountant Suite exists (and why 70% of you haven’t tried it)

When Intuit polled its “In the Know” attendees, which includes people who voluntarily show up for monthly product updates, here’s what they found:

13% had never heard of Intuit Accountant Suite
57% had heard of it but hadn’t tried it
25% were currently trying it
5% tried it and went back to QBO Accountant

Think about that. These are Intuit’s most engaged users, and 70% haven’t even logged in to see what’s there.

Intuit’s data explains why they built this platform. There’s been a 17% two-year decline in the accounting workforce. Firms use an average of eight different apps just to manage operations. And 70% of firms use AI without any policies to guide it.

Intuit’s solution is to build a centralized hub that reduces app switching, brings up the information you actually need, and places guardrails on AI tools to protect client data. As Dan explained, “Having it inside QuickBooks allows those guardrails to kind of be already in place. You don’t know if those free tools are learning from the information you’re feeding it.”

The free core tier: Navigation that finally makes sense

The first thing you’ll notice in Intuit Accountant Suite is the reorganized navigation. Even Alicia, who literally wrote a book on QuickBooks, calls it a “huge improvement.”

Previously, everything was crammed into one confusing flyout sidebar. Client management mixed with your own books. Work tasks bumped up against firm administration. “I had trouble navigating it myself,” Alicia admitted.

Now it’s clean and logical, with three distinct sections in the left navigation:

Clients: Your client dashboard and management tools
Work: Tasks and project management
Firm Hub: ProAdvisor certifications and team management

The flyout menu is now just for your own books. Simple.

But navigation is just the start. The real power comes from the customizable dashboards and custom fields.

Custom fields and dashboards let you organize your practice your way

One feature flying under the radar is custom fields. You can create up to 99 custom fields to tag and organize your clients however you see fit for your practice.

If you want to segment by industry, you can create fields for restaurants, e-commerce, therapists and more. To segment by service level, tag clients as Simple Start, Essentials, Plus, or Advanced. To segment by service tier, label them CAS, advisory, or audit. You could also segment by geography, tagging them as West Coast, East Coast, or wherever they are.

You can assign these fields in bulk, sort by them, search by them, and add them as columns to your dashboard. “When you’re looking at your client list on your dashboard, you have all of that custom field information right on the list,” Alicia explained.

The dashboards themselves are fully customizable. Click the Customize button, rearrange widgets, turn off what you don’t need, and turn on what you do. And keep checking back because Intuit will add new widgets regularly. Dan highlighted what’s coming, including “disconnected bank feeds, app issues, and being able to see the right from without going into each individual client.”

Multi-tab support is coming soon, so you can work in different client files simultaneously in the same browser window.

Accelerate and Books Close: For firms ready to level up

While the core tier is free for everyone, Intuit built Accelerate for larger firms that need more firepower. Starting August 1st, it costs $149 per month for your entire firm, not per user. As Dan noted, “If you have a team of five people, around $30 per person isn’t bad.”

Accelerate includes two standout features:

User groups with bulk permissions. Create functional teams (such as your AP crew, your AR team, your reviewers), set their permissions once, then assign entire teams to new clients in bulk. No more client-by-client, person-by-person permission setting.
Client Insights Dashboard. Pull KPIs from all your clients into one consolidated view, not just from QuickBooks, but from ProConnect Tax, payroll, and bill pay, too. Choose your KPIs, watch for anomalies flagged in red or green, and click the sparkle icon for AI-powered root cause analysis. Save up to 50 custom dashboard views for different client segments.

Then there’s Books Close, which 87% of webinar attendees either hadn’t heard of or hadn’t tried. It’s about $8 per client and creates a structured month-end checklist you work through without entering individual client files. It flags transactions over $2,500, new vendors needing W-9s, uncategorized transactions, missing payees, and all the stuff you check anyway, now in one place.

You can assign three roles (preparer, reviewer, director), customize the templates with your tasks in your order, and apply different templates to different client types. As Dan described it, it’s “a one-stop shop for your client work.”

The timeline you need to know

Here are the dates that matter:

Now through July 1: Free beta period for all features
June 1: Expanded weekend support hours for Silver ProAdvisors
June 8: Expanded weekend support hours for Gold/Platinum/Elite
June 30: ProAdvisor recertification deadline
August 1: Paid pricing begins ($149/month for Accelerate)
December 31: Legacy QBO Accountant discontinued

But Intuit won’t automatically charge you. Even if you opt into Accelerate now, you’ll need to confirm again before billing starts. “Can you imagine the number of refunds they would have to do?” Alicia asked. It’s a smart double opt-in system that eliminates billing surprises.

Early adoption gives you a voice

Ninety-four percent of users who switched to Intuit Accountant Suite stayed. Most found it quick and easy. Alicia even prefers it because her interface finally matches what clients see. There’s no more navigating the old black-bar design while clients use the new platform.

But the real reason to opt in now is that you can shape what it becomes. As Alicia emphasized, “If you opt in, you can give feedback while it’s in development. Whereas if you wait, then you get what they give you.”

Intuit is actively asking which KPIs to add, which features to prioritize and which problems to solve. Once development locks in, that window closes.

Your next steps

The math is simple. The workforce is shrinking. Tech stacks are fragmented. AI adoption is outpacing policy development. Intuit Accountant Suite addresses all three challenges at once if you take the time to learn it.

Go to your Settings menu today. Click “Try Intuit Accountant Suite.” Test the core features. Explore Accelerate and Books Close while they’re free. When something’s missing or broken, tell Intuit. Right now, they’re listening.

For the full conversation, including details about expanded support hours, the Workforce rebrand, Enterprise Suite updates, and what’s happening at Scaling New Heights, listen to Episode 145 of The Unofficial QuickBooks Accountants Podcast.

Nobody Is Going to Hand You Power, So Here’s How to Build Executive Presence on Your Own Terms

Earmark Team · July 7, 2026 ·

Lindsay Patterson’s very first day as a reporter should have been routine. Twenty years ago, she walked into a small community meeting in Uvalde, Texas, fresh out of college, holding a notepad and recorder, ready to cover a state representative’s remarks for the local paper. She sat down, pen ready. Then the representative stood up, scanned the room, and asked whether anyone from the Uvalde Leader-News was present. When Lindsay raised her hand, he announced he wouldn’t speak as long as she was in the room.

She didn’t stand her ground or fight back. She walked out, sat in her car, and cried.

Today, Lindsay is the CEO of CPA QualityPro, a compliance platform that helps firms navigate licensure and CPE requirements. She’s served as executive vice president at the Institute of Internal Auditors and spent years at the AICPA working on accounting standards and the CPA exam. She holds multiple certifications, including CPA, CIA, and CAE, all earned while working full time and raising kids.

In Episode 30 of She Counts, the real-talk podcast for women in accounting, Lindsay joined hosts Questian Telka and Nancy McClelland to unpack a frustrating phrase in professional development: executive presence. It’s the vague feedback that shows up in performance reviews as the reason you didn’t get promoted, without anyone explaining what it means or how to get it.

Women are often told that executive presence means adopting traits traditionally associated with male leaders. Lindsay argues that the real measure is much simpler: whether the people around you leave interactions believing you’re the right person for the job.

Redefining Executive Presence

Many of us absorbed a version of executive presence without questioning it. “I had a very traditional view of executive presence. It’s like the three-piece suit guy pulling out a pocket watch,” Lindsay said, admitting where she started. “He’s speaking aggressively and assertively. I’m like, oh, that guy has executive presence.”

Nancy shared her own assumptions. For women, she thought it meant Chanel bags, specific jewelry, and perfect polish. “I will tell you, if we’re going to judge me on my ability to make that happen, I will fail,” she said. “I look like I’m dressed up for a high school play or something.”

But Lindsay’s working definition is simpler. “If you were to distill it into simple terms, it’s just instilling confidence in people. Are people confident I can do a good job? Can I lead the team? Can I deliver results or do what I say I am going to do?”

The research backs this up. Lindsay cited the Coqual findings that gravitas, or how you present yourself, is what people overwhelmingly evaluate for executive presence. Communication makes up about a third. Appearance is only 5%.

This is good news for anyone worried their personal style disqualifies them from leadership. Lindsay owns a fully sequined black suit and has worn floor-length tutu gowns to office meetings. She’s also been a CPA Practice Advisor 40 Under 40 honoree and runs a successful company. The two things work together just fine.

But Lindsay was clear that executive presence is not “overtalking people, interrupting, being really aggressive and mean.” She added an important caveat. “I say that’s not what it should look like. But we have to recognize it is viewed that way in some office cultures.”

She shared a story that made Nancy ask if it was real. At one company, a man criticized another executive for wearing a Rolex because it showed “new money.” If you wanted to instill confidence as a leader, apparently you needed at least a Patek Philippe. “What?” Lindsay said. She didn’t last long in that culture.

The story might be absurd, but it shows something important. In many places, executive presence gets defined by an unspoken code written by and for one specific kind of leader. When that code becomes the standard for measuring women, the game is rigged from the start.

The Double Bind: When the Rules Work Against You

Even with a better definition, women face a structural problem. The same behaviors that signal confidence in men get labeled as aggression in women.

“How often do you hear in performance reviews that a male was aggressive? Never. That gets assigned to women,” Lindsay stated plainly. Being direct, standing firm, and pushing back in meetings gets men praised for “standing up for their beliefs” while women get called “difficult” (or worse).

Then there’s what Questian called the competence-warmth trap, referencing Vanessa Van Edwards’ research. If you’re warm and approachable, people see you as less competent. You need both warmth and competence to hit the sweet spot, but too much warmth works against you.

The research on competence perception is even tougher. Lindsay delivered her “good news, bad news” moment. “If I show up and I am just as good as my male colleague, I’m probably going to be viewed as less competent. And there is a whole body of research to show this.”

Women don’t just need to meet the bar. They need to clearly exceed it, just to be seen as equal. That means overpreparing is essential.

The dynamics shift with race, too. Lindsay acknowledged their position, noting, “We’re all three white women.” She’s seen firsthand what she can get away with that a Black female colleague cannot. Nancy put numbers to it. If white women prepare at 120%, Black women face pressure to deliver at 170%.

Then came the episode’s most provocative moment. Questian asked if coaching women on executive presence puts the burden on them to fix a structural problem. Lindsay’s answer was direct. “Yes, we’re asking women to do this. You know why? Because nobody else is going to do it for us. People in power are not just going to hand us power. That’s not how power systems work.”

“The world’s not going to dominate itself,” Nancy said, summing it up.

But Lindsay distinguished between assimilation and strategy. The goal is to work strategically within existing systems by pushing boundaries, gaining influence, and reshaping culture from within. “As we rise to power, not only are we going to instill our own cultural norms, but then you’ll start to see cultures change.”

Your Practical Playbook: Build Presence Through Preparation

Lindsay’s closing advice was the episode’s most powerful line. “Confidence is just preparation. If you do something enough times, you will come across as confident. You will have that executive presence.”

Executive presence is a skill built through practice. Here’s Lindsay’s concrete playbook:

Start with an audit. Record yourself before a difficult conversation or presentation. Watch the playback and ask, Does my body language say what I want? Do I sound knowledgeable? Am I the confident person I want this audience to see? You likely already have the material, since most meetings are now recorded on Zoom.
Separate sound from sight. Listen to your recording with no video. Just evaluate your speaking. Then watch with no sound to evaluate body language. Then watch both together. This lets you see what each channel actually communicates.
Rehearse with your circle. If you have trusted professional friends, use them. Practice difficult conversations. Do dress rehearsals for interviews. Ask for feedback on how you plan to challenge your boss. Lindsay does this with her own circle, and she extended an invitation to listeners. “If you don’t have that and you’re listening and you’re like, ‘I have this interview coming up,’ literally connect with me on LinkedIn. I’m happy to help. Other women did that for me.”
Prepare for disruption. Anticipate what typically derails you. “Is Bob going to interrupt me like he always does? Well, how am I going to respond?” Plan your response. When the moment comes, hold your ground without escalating.
Master the context. Your presence should shift based on your audience. As Nancy noted, the best version of you when meeting with nervous small-business owners differs from the one you use when meeting with a board chair. Both are authentic, but context defines what instills confidence.

For virtual meetings, have the camera on (especially when presenting), use good lighting, choose a quiet location, and avoid multitasking. Nancy made the trust connection clear. If she can’t see someone’s eyes on Zoom, she doesn’t trust them.

In person, make sure your shoulders are back and your head is up. Look confident and take up space. Lindsay admitted to intentional “manspreading” in meetings. “I have every right to be here, and I’m going to show that with my body.”

Don’t forget the practical details. Rehearse in the shoes you’ll actually wear. Nancy learned this after nearly injuring herself while presenting in heels. Now she presents in go-go boots that match her Dancing Accountant brand. Lindsay shared a cautionary tale about a team member who wore a tube top to an external Zoom meeting. Over a year later, the client still talked about the tube top instead of the meeting content.

The Scared Child Inside Us All

Lindsay shared what she wishes someone had told her 20 years ago. “Most people are faking it. We are just doing our best, trying to get by.”

Nancy connected this to waiting for the moment she’d become a confident adult. “When I realized that line doesn’t exist and a lot of us are carrying that scared child inside us until we die, then you’re like, oh, cool. Well, then I can start taking care of that scared kid because I’m also a confident adult.”

Lindsay offered one more insight from experience. “You could be the most round, juiciest peach on the tree. And there’s always going to be somebody who doesn’t like peaches.” You won’t be everyone’s cup of tea. The sooner you accept that, the sooner you can focus on instilling confidence in the people who matter to your goals.

Your Presence Is What People Remember

Executive presence has been weaponized for too long as vague feedback that holds women to standards built for someone else. But Lindsay’s definition offers us something useful: instilling confidence in the people around you.

The double bind is real. The bar for perceived competence is measurably higher for women and higher still for women of color. These are structural realities, not personal failures. Recognizing them means understanding the terrain so you can navigate it.

The antidote is preparation. Record yourself. Rehearse with trusted peers. Anticipate the disruptors. Adapt to context. You build confidence through repetition.

No one will hand women the keys to power. The work of getting inside the system and reshaping it falls on us. As more women rise by carrying their own authentic executive presence, they can redefine what leadership looks like for those to come.

Questian closed with Maya Angelou’s words: “I’ve learned that people will forget what you said. People will forget what you did. But people will never forget how you made them feel.”

That’s executive presence.

Listen to the full episode, and if you take one thing from this conversation, share it on the She Counts Podcast LinkedIn page. What will you try differently the next time you walk into a room or join a Zoom call?

Beyond the Stock Sale: Allocating Purchase Price When S Corp Assets Sell Individually

Earmark Team · July 7, 2026 ·

When a buyer offers $1 million for your client’s S corporation, the simplest path is a stock sale. There’s one transaction, one gain calculation, and you’re done. Purchase price minus stock basis equals gain. You could calculate it on a napkin. But most buyers don’t want simple. They want to crack open the corporate shell, pick out only the income-generating assets, and leave the entity (and its liabilities) behind. That’s when your job as a tax practitioner gets exponentially more complex.

In Episode 30 of Tax in Action, Jeremy Wells, EA, CPA, walks practitioners through the intricate mechanics of S corporation asset sales, building directly on the stock sale fundamentals he covered in Episode 29. Using Lighthouse LLC, a fictional single-shareholder S corp with a $1 million offer on the table, Jeremy demonstrates how to classify assets across seven categories, allocate purchase price using the residual method, calculate gains with proper character for each asset, and report everything correctly on Form 8594.

The shell versus what’s inside

Jeremy opens with a metaphor that captures the distinction. “One way to think about this is buying the shell and everything that’s inside the shell, or just cracking open that shell and buying only the stuff inside of it and leaving the shell behind.”

In a stock sale, the buyer acquires the entire entity. Every asset and liability, the brand name, the corporate history, etc. It’s one transaction. For Jessica, the 100% owner of Lighthouse LLC with a $250,000 stock basis, a $1 million stock sale means a $750,000 gain. Simple capital gain calculation. Done.

But the buyer in Jeremy’s example wants something different. Lighthouse LLC carries significant liabilities tied to its property and equipment. The buyer wants the income-producing assets, including the equipment, building, land, customer relationships, and goodwill, but not the debt. Not the entity itself.

This preference flips everything for the tax practitioner. Instead of one gain calculation, you now have to analyze every individual asset on the balance sheet and beyond.

Why buyers insist on asset sales (and why sellers often resist)

Jeremy explains buyers push for asset sales for two compelling reasons.

Stepped-up basis opportunity

When buyers purchase assets directly, they own them outright, not through a corporate intermediary. “It’s as if the buyer purchased those assets from the manufacturer or from the retailer. It’s going to be an original placement into service of those assets by the buyer,” Jeremy explains.

This means depreciation starts fresh. The buyer’s basis in each asset equals the allocated purchase price, not whatever the seller paid years ago. This reset can be enormously valuable for a building the seller has been depreciating for a decade. Nothing changes in a stock sale. The buyer inherits the existing depreciation schedule exactly as it stands.

Avoiding unwanted liabilities

In an asset sale, debts stay with the corporate shell. The buyer takes the assets clean. This is an important distinction for Lighthouse LLC, with its property-related debt.

Sellers, meanwhile, generally prefer the simplicity of stock sales. Jeremy notes they “often produce just a single capital gain, and they avoid the complexity of having to allocate purchase price among assets.” But when buyers insist on asset purchases (and they usually do), sellers often agree, especially when they want to retain the entity for future use or restructuring opportunities.

The residual method

Once both parties agree to an asset sale, IRC Section 1060 takes control, and Jeremy emphasizes this isn’t optional. If you’re selling assets that constitute a trade or business and the buyer’s basis will be determined by the purchase price, Section 1060 always applies.

The section mandates the use of the residual method to allocate the purchase price across seven asset classes, working sequentially from Class 1 through Class 7. Jeremy compares this to reading down a balance sheet because the most liquid assets come first and the least liquid come last.

Here’s how Lighthouse LLC’s assets break down:

Class 1 (Cash): $50,000. No gain possible. Cash is just cash.
Class 2: None in this example (would include actively traded securities, CDs, foreign currency)
Class 3 (Accounts receivable): $100,000 fair market value, but zero tax basis for this cash-basis taxpayer. That means $100,000 of ordinary income.
Class 4 (Inventory): None in this example
Class 5 (Tangible assets):
- Equipment: $100,000 tax basis, $50,000 FMV
- Building: $300,000 tax basis, $400,000 FMV
- Land: $100,000 tax basis, $150,000 FMV
Class 6 (Intangibles except goodwill): Customer list valued at $100,000, zero basis
Class 7 (Goodwill): The residual is whatever’s left after allocating to Classes 1-6

With $850,000 allocated to identifiable assets and a $1 million purchase price, the remaining $150,000 becomes goodwill.

But Jeremy offers a crucial warning: “You can’t just treat all Class 5 assets the same because they’re Class 5.” Each asset needs individual analysis. Equipment might trigger Section 1245 recapture. Buildings might trigger Section 1250 recapture. Land never has recapture because it’s never depreciated. Every asset has its own character of gain.

The invisible assets that drive real value

Jeremy dedicates some time to intangible assets because, especially in service businesses, “goodwill actually is the largest asset.”

Treasury regulations define goodwill as “the value of a trade or business attributable to the expectancy of continued customer patronage.” It includes reputation, brand recognition, a trained workforce, documented procedures, modern technology application, and consistent lead generation.

However, “It’s never appropriate to add goodwill, especially self-generated goodwill, to a balance sheet, unless you have a sales transaction,” Jeremy shares. Goodwill doesn’t get a balance sheet value until a buyer actually pays for it.

Practitioners must also watch for personal versus corporate goodwill. Jeremy references Martin Ice Cream Company v. Commissioner, where the Tax Court held that when goodwill exists because of one individual’s personal relationships with customers and vendors, it belongs to that individual,

not the corporation. This distinction has a big impact on reporting in small professional firms where the owner is the brand.

Covenants not to compete present another wrinkle. They’re Class 6 intangibles, not goodwill, so you must separately identify and value them. Jeremy explains these are especially common in professional firm acquisitions, where the buyer doesn’t want the seller to start a competing practice nearby.

For the buyer, goodwill becomes a Section 197 intangible, subject to 15-year straight-line amortization with no acceleration through bonus depreciation or Section 179. For the seller, it’s Section 1231 property with zero basis, meaning the entire allocated amount is gain.

Your workflow

Jeremy provides a clear workflow for every practitioner to follow:

Get all documents first. You should have a copy of the signed purchase agreement and allocation schedule or proforma Form 8594. Both parties must report identical allocations.
Allocate the purchase price using Section 1060’s residual method
Calculate gain and character for each asset
Report on Form 8594 attached to the return
Pass gains to shareholders via Schedule K-1
Adjust shareholder basis for the pass-through gains
Handle liquidating distributions. Typically long-term capital gain at preferential rates

Jeremy shares a moment of professional conviction. “The client wanted me to just make up some numbers, and I simply would not go along with that.” He won’t prepare the return without proper allocation documentation agreed to by both parties.

His due diligence checklist adds crucial considerations:

Review prior depreciation schedules and shareholder basis calculations
Check state transfer taxes and sales taxes on tangible property
Evaluate installment sale benefits under Section 453. But remember, no help with depreciation recapture or inventory.
If the S corp was ever a C corp, check for built-in gains tax under Section 1374

Jeremy also mentions two elections that can treat stock sales as asset sales: Section 338(h)(10) and Section 336(e), though their complexity puts detailed discussion beyond this episode’s scope.

Bringing it all together for your practice

Asset sales are some of the most complex transactions you’ll handle as a tax practitioner. Where a stock sale for Lighthouse LLC requires one line of math, the asset sale demands individual analysis of every asset across seven classes, each with its own basis, fair market value, gain character, and recapture rules.

The residual method provides structure, but it’s not simple. Intangible assets are often the most valuable components of service businesses, and they’re invisible on the balance sheet until the sale takes place. You risk serious reporting errors if you don’t follow the documentation requirements.

Jeremy developed his systematic approach through classroom teaching and real-world practice. And it gives you the framework to handle these transactions correctly. The key is recognizing that in asset sales, you’re not selling one thing; you’re selling every individual asset, and each one has its own tax story to tell.

For the complete technical discussion and to hear Jeremy work through the full Lighthouse LLC example, listen to Episode 30 of Tax in Action. And if you haven’t already, start with Episode 29 on stock sales. Understanding that simpler transaction makes the complexity of asset sales much clearer.

Your AI Isn’t the Problem—Your Ledger Is

Earmark Team · July 6, 2026 ·

You export a report from your accounting software, spend 20 minutes cleaning up the data in a spreadsheet, paste it into ChatGPT, and ask about vendor spending trends. The AI immediately asks for more context that wasn’t in your export. Back to the source system, pull another report, reformat, and upload again. The cycle repeats.

If this loop feels painfully familiar, you’re not alone.

In a recent Earmark webinar, Megan Reid, Product Specialist at Digits, demonstrated exactly why this workflow keeps breaking down and introduced a technology designed to eliminate it entirely. The webinar unpacks what’s really limiting AI’s usefulness in accounting and shows a fundamentally different approach.

The core message is that Model Context Protocol (MCP) eliminates the export-reformat-upload cycle, but only if your ledger is truly AI-ready. As Megan explained, your financial data architecture now determines whether AI delivers reliable insights or confidently wrong answers.

The traditional workflow is fundamentally broken

Let’s walk through what Megan calls the “bolt-on” AI workflow. Most accountants know this workflow far too well.

You export a report. The moment you hit that button, your data freezes in time. You’re working with a snapshot, not live information.
Manual cleanup begins. You’re renaming columns, adjusting formulas and reformatting data. Every manual touch introduces potential errors.
You send the cleaned data to your AI tool. It analyzes what you’ve given it and generates an answer, but it can only see that specific export. No additional context or visibility beyond that snapshot.
The AI needs more information. Maybe vendor history or prior period details that weren’t in your original report. You can’t answer without going back to start the entire process over.

“This isn’t a limitation on the AI,” Megan emphasized during the session. “It’s a limitation on the data pipeline feeding into the AI.”

Megan introduced a powerful concept when she explained that AI acts as a megaphone for your data. When the input signal is clean (i.e., real-time, well-structured, and consistently categorized), AI generates accurate analysis and trustworthy insights. When the signal is poor (i.e, outdated data, inconsistent vendor names, and incomplete transactions), the AI still produces an answer.

“A wrong answer delivered with confidence,” Megan noted, “is often worse than no answer at all.”

The accounting profession recognizes this shift. The Journal of Accountancy states that “the profession must pivot from doing to supervising when AI does the work.” As one industry publication put it, “The industry is shifting from manual data entry to automation, where the accountant’s job is less about performing repetitive tasks and more about defining the logic once and letting the system run it.”

But you can’t supervise what you don’t understand. And you can’t get reliable outputs from a broken data pipeline.

Enter Model Context Protocol

So what breaks the cycle? That’s where MCP comes in.

At its core, MCP is an open standard letting AI tools like Claude, ChatGPT, and Cursor connect directly to live data sources. Megan offered a perfect analogy: think of MCP as USB-C for AI. Before USB-C, every device needed a different cable. USB-C created one standardized connection. MCP does the same for AI and data.

The AI doesn’t change. It simply gains direct, permission-based access to your financial information through a standardized connection. No exports, uploads, or stale spreadsheets. The AI reads your live ledger in real time with full context.

But Megan stressed MCP is only as powerful as the ledger it connects to. A direct pipeline to messy data just delivers messy answers faster.

How do you know if your ledger is ready? Megan presented three diagnostic questions:

Are transactions sitting in a queue? In traditional systems, bank feeds arrive uncategorized, waiting for manual review and posting. If your books take two weeks to close, your AI operates on two-week-old information. “It’s difficult for business owners to make real-time decisions using old data,” Megan explained.
Does your system know “Uber” and “Uber Technologies Inc.” are the same vendor? To humans, it’s obvious. To traditional ledgers, they’re separate text strings. “This isn’t a data entry problem,” Megan clarified. “It’s a data architecture problem.”
Is the tool itself a bottleneck? When slow page loads, endless clicking, and constant manual saves slow you down, data falls behind.

If you answered yes to any of these, your ledger isn’t AI-ready, regardless of how sophisticated your AI tools are.

The four pillars of an AI-ready ledger

Megan outlined what an AI-native ledger actually looks like through four pillars:

Real-time processing

Transactions are automatically categorized and posted as they arrive, not sitting in a queue. With Digits, for example, transactions are “continuously being posted, reviewed, reconciled, and reflected in your financials in real time.”

Object-oriented data

Every vendor, customer, and category is stored as a structured object. Variations from the same vendor are treated as a single entity, providing AI and accountants with a reliable foundation for analysis.

Autonomous bookkeeping

The system handles routine bookkeeping automatically, allowing accountants to focus on “reviewing, supervising, advising, rather than manually processing those transactions.”

Accessibility

Even the best technology has limited impact if firms face barriers to adoption. As Megan noted, firms shouldn’t have to “navigate complex pricing models, marketplace restrictions, and AI licensing costs just to take advantage of these modern tools.”

“AI readiness isn’t about having access to AI tools,” Megan summarized. “It’s about having a financial system that can provide accurate, structured, current information for those tools to work with.”

Seeing MCP in action

Theory is one thing. Watching it work is another.

During the live demo, Megan showed exactly what MCP-powered accounting looks like using Claude’s desktop app. Setup was surprisingly simple. You open Claude, navigate to connectors, search for Digits, and add it. No complex configuration needed.

With the connection live, Megan demonstrated real-world scenarios using a demo client:

Vendor spend analysis. She asked Claude to review which vendors grew most over three months and flag unusual spending. Within minutes, the AI identified that payroll scaled smoothly with headcount, spotted a November bonus spike, and highlighted fast-rising smaller vendors. No exports or reformatting. Just direct questions and detailed answers.
Budget creation. She requested a 2026 budget based on two years of historical data. The AI produced a complete budget showing prior actuals, year-over-year changes, and projections with adjustable assumptions, like testing a 40% revenue growth scenario. Everything was interactive and exportable to Excel.
Budget-to-actuals reporting. Building on that budget, she asked for Q1 comparisons. The AI generated monthly trends, variance analysis, and actionable recommendations. It didn’t just show that revenue was below budget and expenses were over. It identified specific areas to review, like legal costs and growth assumptions.
Expense optimization. When asked to identify potential cuts, the AI flagged a $1,600 charge for an HR tool that likely overlapped with the demo company’s payroll software. It also spotted a redundant AI bookkeeping subscription that duplicated Digits’ capabilities. These insights normally require hours of manual vendor analysis.

All of this happened in minutes through MCP’s direct, secure access to the live ledger.

The possibilities extend further. As Megan explained, you could connect MCP to multiple tools and ask cross-functional questions like, “Look at the last call I had with Megan’s demo client. What were the things they pointed out and compare that to the actual financials over the last three months? Help me identify what I should highlight with my client on our next call.”

The ledger is your constant. Everything else is variable.

“The best AI tool for your accounting is whatever you prefer,” Megan said in closing. “The best ledger for your AI tool is one that agents love most.”

AI tools will evolve and multiply. The ledger’s quality, structure, and accessibility are the constant determining whether any of them deliver value.

The shift isn’t just technological. As Tom Hood, Executive Vice President, Business Growth and Engagement at AICPA, noted, this is “an inflection point where finance leaders agree that people drive transformation success—mindset, skills, and leadership, not technology alone.”

Your role is evolving from data processor to financial supervisor and strategic advisor. Success means understanding the technology well enough to oversee it effectively.

Here’s where to start:

Audit your current workflow. How much time do you spend exporting and reformatting before AI can help? That’s your friction baseline.
Apply the three diagnostic questions. Check for queued bank feeds, unresolved vendor duplicates, and tool-created bottlenecks.
Evaluate against the four pillars. Real-time processing, object-oriented data, autonomous bookkeeping, accessibility. If your ledger can’t check these boxes, your AI outputs will always be limited.
Start experimenting. Connect an MCP-enabled tool and run some prompts. Even using a demo environment will shift your understanding of what’s possible.
Build your vocabulary and mindset. Understanding how to evaluate and supervise AI workflows is now a core professional skill.

The traditional export-reformat-upload workflow is broken because the data pipeline starves AI of the context it needs. MCP fixes the pipeline, but only if your ledger is truly AI-ready.

Watch the full on-demand webinar to see the live demos, walk through the diagnostic framework, and start building your firm’s AI-readiness roadmap.