Bert and Ernie are both 50% shareholders in their small business. Ernie is losing passion and interest in the business, and is going to cut ties and explore other opportunities. Ernie and has agreed to sell his 50% to Bert based on an agreed upon valuation of the company. There has already been a legally binding verbal and handshake agreement, with witnesses, on the value and method of payment.
However, Ernie has created a contract with the details discussed in the verbal/handshake agreement, with the demand for extra money to cover taxes added in. Instinct tells me that this was a shady attempt by Ernie to trick Bert into paying Ernie's taxes on the capital gains. In the little market participation I have experienced, this does not feel right.
Is there any precedence for additional money to be provided from the buyer to the seller to cover the seller's taxes?