A business conducted as a C corporation can be purchased in one of two ways, an asset sale or a stock sale. In an asset purchase, the buyer purchases the business by purchasing the assets which make up the C corporation’s ongoing business. In a stock purchase, the buyer purchases the stock of the C corporation that owns all of the business assets. The seller and the buyer are usually at odds over how to structure the acquisition. The decision as to which method is best can be a difficult one because what is good for one party is generally bad for the other. The seller wants a stock sale because there will be one level of taxation of the gain on the sale at long term capital gains rate(s) and the liabilities will pass to the buyer. The purchaser wants an asset sale because the assets will be stepped-up to fair market value and the seller will retain the corporate liabilities. Tax practitioners advising their business clients should be fully conversant with the tax rules that apply to stock and asset sales. Discussing and explaining those rules is the focus of this course.
- Advantages and disadvantages to buyer and seller of an asset sale and a stock sale
- Tax treatment of consulting agreements and covenants not to compete
- Sale of personal goodwill associated with an asset sale
- Tax consequences associated with a stock sale and an asset sale
- Tax free exchange in a stock sale
- Non-tax issues that must be considered when a corporation is sold
- To prepare tax practitioners to advise owners of C corporations and those wishing to buy C corporations of the tax consequences associated with an asset or stock sale
Tax practitioners advising sellers and buyers of C corporations.