Tax Services
M&A Tax
A plain-language look at the tax side of buying or selling a business.
What to Think About When You Buy or Sell a Business
A business sale or purchase brings up real tax questions fast: how the deal is structured, whether it counts as an asset or a stock transaction, and what happens to liabilities that predate the sale. If a transaction is on your horizon, reach out early so we can walk through what it means for your tax picture.
Careful review and structure planning that keeps deal value intact from start to finish.
Key Things to Know
- Deal structure basics
- Questions worth asking
- What changes after closing
Whenever you're ready
Operational Milestones
Advise
Ideally, tax input starts at the letter-of-intent stage, while deal structure, entity choice, and preliminary modeling are still on the table and terms aren't locked in yet.
Diligence
This is where the target's filed returns, open tax positions, transfer pricing, and state nexus exposure get a close look, with a few structuring options modeled out to inform the negotiation.
Close
Tax elections get filed, the purchase price gets allocated, closing-date paperwork gets handled, and the acquired entity gets folded into the combined tax picture afterward.
Included Services & Outcomes
Tax Missteps Can Destroy Deal Value
A missed liability or a poorly chosen deal structure can cost more than the advisory fee itself. It pays to get a tax preparer's eyes on things before signatures happen.
Questions
M&A Tax FAQ
Asset purchase or stock purchase: what actually changes?
With an asset purchase, the buyer takes on specific assets and liabilities and receives a stepped-up tax basis, which generates depreciation deductions down the line. A stock purchase works differently: the buyer takes over the entity itself, along with its existing basis and whatever liabilities came before. Which route is chosen has a real effect on what both sides end up owing.
What does a Section 338(h)(10) election do?
It lets a stock purchase be taxed as though it were an asset purchase, so the buyer still gets a stepped-up basis while the deal keeps the legal simplicity of a stock sale. Both sides have to agree to make the election, and it's worth modeling closely to confirm it actually benefits everyone involved.
What happens to tax credit carryovers after an acquisition?
A Section 382 analysis is what determines whether, and how much of, the target's net operating losses and tax credits carry through the change in ownership. Limitations can apply, but with the right planning, a meaningful share of that value is often preserved.
How early should tax planning start in a deal?
As early as possible, ideally before the letter of intent is signed. Getting tax guidance involved that early leaves room to shape the deal structure, catch red flags during diligence, and avoid expensive surprises that would otherwise turn up after closing.
Does this apply on both sides of a deal?
Yes, the considerations run in both directions. Buyers tend to focus on due diligence and structuring questions, while sellers deal with pre-sale restructuring, installment sale planning, and strategies for deferring gain. Either way, it's worth having a tax preparer involved.
Resources
M&A Tax insights
Thinking About a Business Sale or Purchase?
Reach out for a free consultation. We'll look at your situation, quote a flat fee, and lay out exactly what we'd handle differently.