Buying & Selling Businesses | Attorneys in Jackson, MS
As opposed to mergers and/or acquisitions, more commonly, due to concerns with purchasing all stock of another company, one company will acquire all assets of another company. Asset purchase agreements can be an extremely tax effective way in which to buy or sell substantially all of the assets of a corporation or business entity.
Section 1060 of the Internal Revenue Code provides buyers and sellers with a great deal of flexibility in structuring transactions in consideration of effective tax planning. However, Buyers and Sellers should take extreme care to avoid the many tax "land mines" lurking within a sale of assets. Sections 1245, 1250, and 197 of the Internal Revenue Code establish a host of taxable recapture provisions with which Sellers and Buyers must contend. Likewise, Buyers should take precautions in avoiding allocations that result in lengthy depreciation or amortization periods, which can have serious adverse tax effects.