Twenty questions in the acquisition or disposition of a business are answered. Significant legal and tax issues are involved for both business buyers and sellers. From a legal perspective, the acquired business would remain exposed to the subsequent claims of pre-acquisition creditors, even those unknown at the time. Because the transfer of a business involves a mixed property transaction encompassing both tangible and intangible personalty, a lump-sum purchase price without a specific allocation among assets should never be used. If the seller is involved in an asset disposition, IRC section 1031 can apply to both the realty and most of the business personalty. In the allocation of a lump-sum purchase price, a buyer would be interested in obtaining the fastest writeoffs, which means an allocation to the assets with the shortest life for depreciation purposes. Buyers should consider whether a cost segregation study will be beneficial.
Pages to are hidden for
"Twenty Questions Answered in the Acquisition or Disposition of a Business"Please download to view full document