If you’re buying a business, you want the best results possible AFTER taxes. You can potentially structure a purchase in two ways: 1) Buy the business assets. 2) Buy the seller’s entity ownership interest. If you’re buying assets, you must allocate the purchase price to the specific assets acquired. The amount allocated to each asset becomes the initial tax basis of that asset. For depreciable and amortizable assets (such as furniture, equipment, buildings, software and intangibles such as customer lists), the initial tax basis determines the post-acquisition tax deductions. The allocation process can lead to better or worse post-acquisition tax results. Contact us for assistance.
