Stock & Asset Basis For Business Investment Transaction?
Darrell V. Arne CPA, ASA, CM&AA Investment Banking Representative, runs a business called www.thebusinessbroker.com. It is an excellent resource for anyone seeking to learn more about the process of buying and selling a business in Tucson, or making Tucson business investments.
In particular, we wanted to share with you a recently published series of articles Mr. Arne authored that discuss the ins and outs of whether to use a stock or asset basis for the transaction, and in what circumstances it may be possible to do both.
Arne writes that:
“Purchasers in a business transaction generally prefer an asset purchase in order to step up the basis of acquired assets. Yet, a stock purchase may be preferable for a variety of non tax reasons. Normally in a stock purchase, the consideration paid becomes the tax basis of the stock from the purchaser’s standpoint.
However, in certain circumstances, the Internal Revenue Code gives the purchaser and the seller the ability to make a joint election where the actual transaction is a stock purchase, but for tax purposes it is treated as an asset purchase. This is accomplished by making a Section 338(h)(10) Election (H-10 Election) – the subject of this article.”
Follow the links below to the original article, which comes in three parts.
If you’d like more information on this subject, please Contact Us.