Property Management in Missouri
Missouri subtracts the gain on your goodwill and taxes your non-compete.
Missouri changed one number in 2025. Section 143.121.3(14)(a) RSMo now subtracts one hundred percent of an individual's federally reported capital gain from federal adjusted gross income in computing Missouri adjusted gross income, for all tax years beginning on or after January 1, 2025. Three things follow: who that subtraction is written for and how the sale-year election under § 143.436 RSMo interacts with it, the clearance certificate § 143.241 RSMo makes the seller obtain and hand to the buyer before consummation, and the reason § 431.202 RSMo will not hold the staff a buyer wants to keep.
St. Louis / Kansas City / Springfield / Columbia
Missouri's one hundred percent capital gains subtraction is written for individuals
Section 143.121.3(14)(a) RSMo subtracts from federal adjusted gross income, in computing Missouri adjusted gross income, "one hundred percent of all income reported as a capital gain for federal income tax purposes by an individual subject to tax pursuant to section 143.011," for all tax years beginning on or after January 1, 2025. There is no holding-period condition anywhere in that language, so a short-term gain sits inside the subtraction on the same terms as a long-term one. The Department of Revenue puts the claim on Form MO-A, lines 18Y and 18S, filed with the MO-1040.
The Department's own capital gains subtraction page does not agree with itself on when the subtraction starts. Its opening answer describes the provision as effective for the 2025 tax year. Its answer on when a taxpayer can first claim it says tax years beginning on or after January 1, 2026, first claimable on the 2026 return filed in 2027. The statute names 2025 and Form MO-A already carries the line, so a seller closing inside a 2025 tax year should have the position confirmed with the Department rather than built off either sentence.
The subtraction reaches an individual subject to tax under § 143.011, and not every owner of a management company will be that individual. Subdivision (14)(b) extends the same one hundred percent subtraction to entities taxed under § 143.071, but only for tax years beginning on or after January 1 of the year following the year in which Missouri's top individual rate falls to 4.5 percent or lower, and the Department puts that top rate at 4.7 percent for 2025, so the corporate switch is off. The Department's stated position is that a pass-through entity subject to Missouri's pass-through entity tax is neither an individual under § 143.011 nor an entity under § 143.071, and so cannot claim the subtraction itself. Trusts and estates are taxed under § 143.341 rather than § 143.011, and the subtraction's text does not on its face reach them; the Department's page does not address them at all. An owner who moved company interests into an irrevocable trust should put that question to counsel or to the Department before the closing date.
The pass-through election has to be made again in the year of the sale. Section 143.436.11 RSMo states that "[a] separate election shall be made for each tax year," so what the company elected in earlier years does not carry into the sale year. Two other provisions decide how the choice lands. Section 143.436.5(2) lets a member elect not to have the tax imposed as to that member's allocable items, which is the mechanism that keeps the gain on the member's own MO-1040 where § 143.121.3(14)(a) reaches it. Section 143.436.8 gives each member a credit against § 143.011 tax equal to their pro rata share of the entity-level tax paid, carried forward rather than refunded where it exceeds their liability, so a member with little other Missouri income can end up holding a carryforward instead of cash.
Because the subtraction is keyed to what is "reported as a capital gain for federal income tax purposes," it reaches the goodwill and stops at the rest. Consideration allocated to depreciation recapture on equipment, to the seller's covenant not to compete, and to post-closing consulting or employment is ordinary income, taxed on Missouri's ordinary rates, which the Department puts at a 4.7 percent top rate for 2025. The subtraction does not change the federal characterization; it raises what capital gain treatment is worth to a Missouri seller. It does not put the buyer opposite the seller on the allocation either: under 26 U.S.C. § 197 a buyer amortizes purchased goodwill and a covenant not to compete over the same fifteen years.
Section 143.241.4 RSMo makes the certificate the seller's to deliver
On contracting to sell all or substantially all of the business, the seller "shall request from the director of revenue a statement or certificate," "shall present such statement or certificate to the purchaser prior to consummation of the sale," and shall "secure the purchaser's signature thereon as validation of receipt." Skipping any of the three adds a penalty equal to twenty-five percent of the seller's delinquency at the time of the sale, which the statute makes "the sole liability of the seller." A purchase agreement drafted off an out-of-state form puts the clearance in the buyer's closing conditions and assigns the request, the delivery and the countersignature to no one. The statute is indifferent to the drafting: the penalty is the seller's either way.
Section 143.241.5 then conditions the purchaser's side on two acts rather than one: withholding enough of the purchase money to cover the unpaid tax, interest, additions to tax and penalties, and remitting at the time of purchase all amounts so withheld. Money resting with the closing agent has been withheld and has not been remitted, and a purchaser that has done only the first is personally liable for what the seller owes. The section states no cap on its face, which is a reading of statutory silence rather than a settled Missouri holding. Subsection 5 is itself subject to exceptions, and one of them, subsection 7, takes out a purchaser that acquires the business through a secured creditor's enforcement action.
Section 143.241.6 gives the Director of Revenue fifteen days to furnish the statement or certificate, and § 143.241.3 gives the seller fifteen days after the date of selling or quitting business to file the final return. Neither provision gives the buyer a period of reliance on the certificate once it issues. The parallel sales tax provision at § 144.150.4 RSMo does: a purchaser may rely on its certificate for one hundred twenty days, and the Department has fifteen business days to issue it. Section 144.150.4 covers sales tax, and § 143.241 covers employer withholding, which is where a payroll-heavy management company's exposure sits.
The clearance is requested on Form 943, Request for Tax Clearance, through the Department's Tax Clearance Unit, and the Department states that a tax clearance is also required for a financial closing or sale of a business. Form 943 asks separately whether the business pays contributions to the Missouri Division of Employment Security and for that account number, which points at the liability neither clearance settles. Under § 288.110.1 RSMo, where the Division finds that immediately after the change the predecessor's business "is continued without interruption solely by the successor," the successor "shall stand in the position of such predecessor employer in all respects, including the predecessor's separate account, actual contribution and benefit experience, annual payrolls, and liability for current or delinquent contributions, interest and penalties." That is a Division determination on stated conditions rather than something that happens on its own, and a buyer that was not already an employer pays the predecessor's contribution rate for the balance of the current rate year. The documents to pull are the seller's Division rate notices and account history, because that account and its experience move across with the business.
Missouri's no-poach statute is not a non-compete statute
Renting or leasing real estate for another and for compensation is licensed brokerage under § 339.010.1 RSMo, and § 339.020 RSMo makes doing it without a Missouri Real Estate Commission license unlawful. For the staff who work under that license at a property management company, buyers reach for § 431.202 RSMo.
Section 431.202.1 opens on one instrument: "A reasonable covenant in writing promising not to solicit, recruit, hire or otherwise interfere with the employment of one or more employees shall be enforceable and not a restraint of trade pursuant to subsection 1 of section 416.031." Subdivision 1(1) covers a covenant between two or more corporations or other business entities seeking to preserve workforce stability, which the statute deems among the protectable interests of each of them, during and for a reasonable period following negotiations for the acquisition of all or part of one or more of them. So the mutual no-hire in a Missouri letter of intent has a statute behind it, conditioned on being reasonable. It carries no presumption of reasonableness. The conclusive one-year presumption in § 431.202.2 runs only to covenants covered exclusively by subdivisions 1(3) or 1(4), and the acquisition-negotiation covenant sits in 1(1), so it has to be shown reasonable on its own facts. Subdivision 1(4), which does carry the presumption, excludes employees who provide only secretarial or clerical services.
Subsection 3 provides: "Nothing in subdivision (3) or (4) of subsection 1 of this section is intended to create, or to affect the validity or enforceability of, employer-employee covenants not to compete." Subsection 5 provides: "Nothing is [sic] this section shall be construed to limit an employee's ability to seek or accept employment with another employer immediately upon, or at any time subsequent to, termination of employment, whether said termination was voluntary or nonvoluntary." A buyer drafting retention restrictions for portfolio managers and maintenance technicians out of § 431.202 is drafting out of a section that disclaims any effect on non-competes in subdivisions 1(3) and 1(4), and preserves every employee's right to take another job in subsection 5.
Missouri has no non-compete statute at all; enforceability is common law. Baker Sterchi Cowden & Rice's analysis of Whelan Security Co. v. Kennebrew, 379 S.W.3d 835 (Mo. banc 2012), describes the Missouri Supreme Court handling four covenants at once: it narrowed the existing-customer non-solicitation to customers the employees had actually dealt with, held the prospective-customer prohibition unenforceable, upheld a one-year employee non-solicitation under the § 431.202.2 presumption, and vacated summary judgment on a two-year employee non-solicitation, remanding on triable issues of reasonableness. Whelan is cited for Missouri's authority to modify an overbroad covenant, and it is also the case in which one covenant was struck rather than trimmed. One year is the only duration in it that carried a safe harbor. That is the firm's reading of the opinion rather than the opinion text, so counsel should read Whelan itself.
None of that sizes the covenant a buyer will ask the seller personally to sign. Whelan and § 431.202 are employment authorities, and a covenant given by an owner as part of the sale of a business is not an employment covenant; Missouri analyzes that one at common law. Missouri is also not among the thirteen states and the District of Columbia that set a wage or earnings threshold for restrictive covenants, so a Missouri covenant is tested for reasonableness whatever the employee earns. That count comes from a chart its publisher revises, so confirm the current version. Duration and territory come from Missouri counsel with the deal terms in front of them.
Questions Missouri sellers ask
- Do I pay Missouri state tax on the gain when I sell my property management company?
- Section 143.121.3(14)(a) RSMo subtracts one hundred percent of income reported as a capital gain for federal purposes by an individual subject to tax under § 143.011, for tax years beginning on or after January 1, 2025, claimed on Form MO-A at lines 18Y and 18S. Two cautions. The Department of Revenue's own page gives conflicting answers on the start year, describing the provision as effective for 2025 in one place and as first claimable on the 2026 return in another, so confirm the position for your closing year with the Department. And the subtraction only covers what is reported federally as capital gain, so any part of the price allocated to equipment recapture, to your non-compete or to post-closing consulting is ordinary income, taxed on Missouri's ordinary rates, which the Department puts at a 4.7 percent top rate for 2025. This firm does not give tax advice.
- We elected into Missouri's pass-through entity tax. Does that matter in the year we sell?
- Yes, and the election has to be made again. Section 143.436.11 RSMo requires a separate election for each tax year, so what the company elected in earlier years does not bind the sale year. The Department's stated position is that a pass-through entity subject to the pass-through entity tax is neither an individual under § 143.011 nor an entity under § 143.071 and therefore cannot claim the capital gains subtraction itself. Section 143.436.5(2) lets a member elect not to have the tax imposed as to that member's allocable items, which keeps the gain on the member's own MO-1040. Section 143.436.8 gives members a credit for their share of entity-level tax paid, carried forward rather than refunded where it exceeds their liability. Take it to the company's tax adviser before the closing date.
- Who is supposed to get the Missouri tax clearance certificate, me or the buyer?
- You. Section 143.241.4 RSMo requires the seller to request the statement or certificate from the Director of Revenue, present it to the purchaser prior to consummation of the sale, and secure the purchaser's signature on it as validation of receipt. Skipping that carries an additional penalty equal to twenty-five percent of the seller's delinquency at the time of the sale, and the statute makes that penalty the sole liability of the seller. It is requested on Form 943, Request for Tax Clearance, and § 143.241.6 gives the Director fifteen days to furnish it. Section 143.241.3 separately gives you fifteen days after selling or quitting the business to file the final return.
- Why does my buyer want to send the holdback to the state instead of leaving it in escrow?
- Because escrow alone does not satisfy the statute. Section 143.241.5 RSMo conditions a purchaser's protection on both withholding enough of the purchase money to cover unpaid tax, interest, additions to tax and penalties, and remitting at the time of purchase all amounts so withheld. A purchaser that withholds but does not remit is personally liable, and the section states no cap on its face. There is also no reliance period here. The sales tax provision at § 144.150.4 RSMo gives a purchaser one hundred twenty days of reliance on its certificate; § 143.241 gives none, and employer withholding is the exposure a payroll-heavy management company carries.
- Will a Missouri buyer be stuck with our unemployment rate?
- Only on a Division finding. Where the Division of Employment Security finds the business continued without interruption solely by the successor, § 288.110.1 RSMo transfers the separate account, the actual contribution and benefit experience, the annual payrolls and the liability for current or delinquent contributions, interest and penalties, and a buyer that was not already an employer pays your rate for the balance of the current rate year. Have your Division rate notices and account history ready.
Where these facts come from
Everything above that is a rule rather than a judgment is listed here with its publisher and the date it was checked. Licensing, tax and non-compete rules change, sometimes without much notice. None of this is legal or tax advice, and it is not a substitute for your own counsel and CPA.
Section 143.121.3(14)(a) RSMo subtracts from federal adjusted gross income, in computing Missouri adjusted gross income, "[f]or all tax years beginning on or after January 1, 2025, one hundred percent of all income reported as a capital gain for federal income tax purposes by an individual subject to tax pursuant to section 143.011." The text contains no holding-period condition. Subdivision (14)(b) grants the same one hundred percent subtraction to entities taxed under section 143.071 only "beginning on or after January first of the tax year following the tax year in which the top rate of tax imposed pursuant to section 143.011 is equal to or less than four and one-half percent."
Missouri Revisor of Statutes, § 143.121 RSMo. Checked 2026-09-07.
Version effective August 28, 2025. The condition in subdivision (14)(b) has not been met, so the entity-level subtraction is not yet available.
The Department of Revenue states that a pass-through entity subject to pass-through entity tax "is neither 'an individual subject to tax pursuant to section 143.011' nor are they 'an entity subject to tax pursuant to section 143.071'" and therefore cannot claim the subtraction; that corporations cannot claim it at this time, the corporate subtraction taking effect only for tax years beginning on or after January 1 of the year following the year Missouri's top individual rate falls to 4.5 percent or lower; that "[f]or tax year 2025, the top individual income tax rate is 4.7%"; that capital losses do not qualify; and that the subtraction is claimed on Form MO-A at lines 18Y and 18S with the MO-1040. The same page describes the provision as effective for the 2025 tax year in its opening answer, and elsewhere answers that the subtraction applies to tax years beginning on or after January 1, 2026, first claimable on the 2026 return filed in 2027.
Missouri Department of Revenue, Capital Gains Subtraction FAQ. Checked 2026-09-07.
An agency FAQ is the Department's stated position and informal guidance, not statute or regulation. Its two answers on the start year are inconsistent with each other, and its later start year is inconsistent with § 143.121.3(14)(a) and with the Form MO-A capital gain line. Confirm the start year with the Department for the specific closing year. The page does not address trusts or estates.
Section 143.436.11 RSMo provides that "[a] partnership or an S corporation may elect to become an affected business entity that is required to pay the tax pursuant to this section. A separate election shall be made for each tax year." Section 143.436.5(2) permits a member to elect not to have the tax imposed under the section as to that member's allocable items. Section 143.436.8(1) entitles a member to a credit against the tax imposed under section 143.011 equal to the member's direct and indirect pro rata share of the tax paid, with excess carried forward rather than refunded under subsection 8(2).
Missouri Revisor of Statutes, § 143.436 RSMo (SALT Parity Act). Checked 2026-09-07.
Missouri taxes the income of resident estates and trusts under section 143.341 RSMo, a separate section from section 143.011, which imposes the tax on the Missouri taxable income of resident individuals.
Missouri Revisor of Statutes, § 143.341 RSMo. Checked 2026-09-07.
This page states only that the two taxing sections are different and that § 143.121.3(14)(a) names § 143.011. Whether a non-grantor trust or an estate may claim the subtraction is not addressed by the statute's text or by the Department's published guidance, and the outcome is not asserted here. Confirm with counsel or the Department.
Section 143.241.3 RSMo requires an employer that sells all or substantially all of the business or quits the business to file a final return within fifteen days after that date. Subsection 4 requires the seller, on contracting to sell, to "request from the director of revenue a statement or certificate," to "present such statement or certificate to the purchaser prior to consummation of the sale," and to "secure the purchaser's signature thereon as validation of receipt," with failure producing "an additional penalty equal to twenty-five percent of the seller's delinquency at the time of the sale" that is "the sole liability of the seller." Subsection 5, which opens "Except as provided in subsections 6, 7, and 8," requires successors to "withhold an amount of the purchase money sufficient to cover the taxes, interest, additions to tax or penalties due and unpaid" and provides that a purchaser who fails to withhold and "remit at the time of purchase" all amounts so withheld "shall be personally liable" for the seller's accrued unpaid tax, interest, additions and penalties. Subsection 6 gives the Director of Revenue fifteen days to furnish the statement or certificate. Subsection 7 excepts a purchaser that acquires the business through a secured creditor's enforcement action.
Missouri Revisor of Statutes, § 143.241 RSMo. Checked 2026-09-07.
The section states no dollar cap on the purchaser's personal liability on its face. That is an argument from statutory silence and no Missouri decision is cited for it; it should be treated as untested rather than settled.
Section 144.150.4 RSMo carries a parallel clearance mechanic for sales tax and provides that a purchaser "may rely on such certificate for a period of one hundred twenty days," with fifteen business days for the Department to issue it. Neither the reliance period nor the business-day clock has a counterpart in § 143.241 RSMo, which governs employer withholding.
Missouri Revisor of Statutes, § 144.150 RSMo. Checked 2026-09-07.
The two sections are parallel but not identical. The distinction stated here, that the 120-day reliance window exists only for sales tax, is the operative point; confirm the current text of both sections with Missouri counsel before a closing calendar is built on it.
A tax clearance is requested on Form 943, Request for Tax Clearance, through the Department's Tax Clearance Unit. The Department states that a tax clearance "is also required for a financial closing or sale of a business." Form 943 asks whether the business pays contributions to the Division of Employment Security and, if so, for the account number.
Missouri Department of Revenue, Tax Clearance FAQ. Checked 2026-09-07.
Section 288.110.1 RSMo provides that an entity which has acquired substantially all of the business of an employer, and as to which the Division of Employment Security finds "that immediately after such change such business of the predecessor employer is continued without interruption solely by the successor, shall stand in the position of such predecessor employer in all respects, including the predecessor's separate account, actual contribution and benefit experience, annual payrolls, and liability for current or delinquent contributions, interest and penalties." A successor that was not itself an employer at the time of acquisition pays contributions for the balance of the current rate year at the predecessor's rate.
Missouri Revisor of Statutes, § 288.110 RSMo. Checked 2026-09-07.
Effective January 1, 2006. The transfer under subsection 1 follows a Division finding on stated conditions and is not automatic. Subsections 2 through 4 (mandatory transfer on common ownership, denial of transfer where the business was acquired primarily to obtain a lower rate, and penalties for knowing rate manipulation) are Missouri's conformity with the federal SUTA Dumping Prevention Act of 2004, which required every state to adopt them; they are not a Missouri peculiarity and are not covered in the body for that reason.
Section 431.202.1 RSMo provides that "[a] reasonable covenant in writing promising not to solicit, recruit, hire or otherwise interfere with the employment of one or more employees shall be enforceable and not a restraint of trade pursuant to subsection 1 of section 416.031" where it falls within the listed subdivisions. Subdivision 1(1) covers a covenant "[b]etween two or more corporations or other business entities seeking to preserve workforce stability (which shall be deemed to be among the protectable interests of each corporation or business entity) during, and for a reasonable period following, negotiations between such corporations or entities for the acquisition of all or a part of one or more of such corporations or entities." Subdivision 1(4) excludes "employees who provide only secretarial or clerical services." Subsection 2 conclusively presumes reasonable a covenant covered exclusively by subdivision (3) or (4) whose post-employment duration is no more than one year. Subsection 3 provides: "Nothing in subdivision (3) or (4) of subsection 1 of this section is intended to create, or to affect the validity or enforceability of, employer-employee covenants not to compete." Subsection 5 provides: "Nothing is this section shall be construed to limit an employee's ability to seek or accept employment with another employer immediately upon, or at any time subsequent to, termination of employment, whether said termination was voluntary or nonvoluntary."
Missouri Revisor of Statutes, § 431.202 RSMo. Checked 2026-09-07.
Effective July 1, 2001. Subsection 5 is quoted as enacted, including the "Nothing is this section" wording, which the body marks [sic]. This section governs employee no-poach covenants only. It does not authorize customer non-solicitation covenants or employee non-competes, and by subsection 3 it disclaims any effect on employer-employee covenants not to compete arising under subdivisions 1(3) and 1(4). Missouri has no non-compete statute; enforceability of a non-compete is a common-law question, and a covenant given by an owner ancillary to the sale of a business is analyzed under a different standard than an employment covenant.
Analyzing Whelan Security Co. v. Kennebrew, 379 S.W.3d 835 (Mo. banc 2012), the firm writes that "courts in Missouri have the authority to give effect to an overly restrictive non-compete clause by refusing to give effect to its unreasonable terms, or modifying the terms." In Whelan the Court narrowed the existing-customer non-solicitation to customers the employees had actually dealt with during their employment; held the prospective-customer prohibition unenforceable as overbroad, on the ground that it could reach any business in the country that might potentially benefit from the services; upheld a one-year employee non-solicitation under the conclusive presumption in § 431.202.2 RSMo; and, as to a two-year employee non-solicitation, held there were triable issues of fact on reasonableness, vacated summary judgment and remanded. Missouri's recognized protectable interests in the employment context are trade secrets and confidential information, and customer contacts.
Baker Sterchi Cowden & Rice LLC (David M. Eisenberg). Checked 2026-09-07.
A law firm's analysis of the opinion, not the opinion text; the body attributes it as such and directs counsel to the opinion itself. Whelan concerned customer and employee non-solicitation covenants in the employment context. It is not authority on a seller's covenant given as part of the sale of a business, and no duration or territory for such a covenant is recommended.
As of the tracker's June 22, 2026 update, thirteen states plus the District of Columbia impose restrictive-covenant wage or earnings thresholds or criteria: Oregon, Illinois, Massachusetts, Maine, Maryland, New Hampshire, Rhode Island, Virginia, Washington, Nevada, Colorado, Tennessee and Louisiana. Missouri is not among them.
Fair Competition Law, restrictive covenant low-wage threshold criteria chart. Checked 2026-06-22.
Secondary source, and a rolling chart the publisher updates. It supersedes an earlier January 21, 2026 version. Confirm against the current chart before relying on the state list.
Section 339.010.1 RSMo defines a real estate broker by reference to ten acts, each tied to real estate, including a person who for another and for compensation rents or leases real estate, negotiates the rental or leasing of real estate, or assists or directs in the negotiation of any transaction calculated or intended to result in the leasing or rental of real estate. Section 339.010.5 defines real estate as "leaseholds, as well as any other interest or estate in land." Section 339.020 RSMo makes it unlawful to act as a real estate broker without a license issued by the Missouri Real Estate Commission.
Missouri Revisor of Statutes, § 339.010 RSMo. Checked 2026-09-07.
Version effective August 28, 2015 (L. 2015 H.B. 385). The exemptions in § 339.010.9 are not summarized on this page and should be read in full; among them, subdivision (5)(c) permits an unlicensed employee to show a rental unit while acting under the direct instructions of the broker or owner, "including the execution of leases or rental agreements."
Under 26 U.S.C. § 197, a purchaser amortizes an amortizable section 197 intangible ratably over fifteen years; goodwill and a covenant not to compete entered into in connection with an acquisition of an interest in a trade or business are both section 197 intangibles.
Legal Information Institute, Cornell Law School, 26 U.S.C. § 197. Checked 2026-09-07.
Federal law, cited here only to state the buyer's position accurately against Missouri's state-level allocation incentive. This firm does not give tax advice; confirm with the seller's CPA.
Page last reviewed 2026-09-07.
How other states handle the same questions
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