Tax Issues Every Business Broker Needs to Know – Part II

Every business transaction occurs in two fundamental ways. A Seller sells and a Buyer purchases assets or a Seller sells and a Buyer purchases ownership interests (corporate stock, LLC member interest, partnership interest, etc.). The overall planning and related structuring for a transaction will be unique and simple or complex depending on the transaction. But these fundamentals will be included.

The amount of tax liability incurred by a Seller in a business transfer is directly impacted by whether the transfer is handled as an Asset or Stock Transaction. Buyers tend to favor Asset Transactions while Sellers generally tend to favor Stock Transactions. In a business transfer the Intermediary is normally representing the Seller but the Intermediary must consider how the structure of the transaction will impact both the Seller and the Buyer.

This Part II section covers Asset Transactions, Stock Transactions and Allocation of Purchase Price. This session provides the participant with the basics to understand the impact that an Asset and Stock transaction decision will have on the success of a business transfer. Allocation of Purchase Price will go beyond a surface level understanding by looking at what strengthens an asset allocation in the eyes of the IRS, by looking at tax associated with certain hard to understand assets and by gaining an understanding of the provisions associated with the seven asset classes.