Sale Or Purchase Of A Business

If you are thinking of selling your business or buying another business, please call us. There are many ways to structure the sale or purchase of a business and assist you with understanding the tax ramifications. We can help you determine the selling or purchase price and how to make the business more valuable.

Sales that involve corporations either involve sale of the stock or sale of the corporate assets. The sale of the corporate assets requires allocation of the purchase price to each asset that is sold to determine the buyer’s basis in each acquired asset and the seller’s gain or loss on the sale of each asset. The sale price is allocated to cash-type assets, inventory, furniture and fixtures, land, buildings, equipment and accounts receivable with the balance being assigned to goodwill.

It may be advantageous for the purchaser to obtain a professional valuation/appraisal of assets. Improper allocation can mean the difference between writing off the amount in one year (cost of goods sold) vs. seven years (furniture, equipment, etc.) vs. 39 years (buildings). Goodwill is written off over 15 years. If there is no agreed upon allocation in the purchase agreement, we can negotiate this.

Both the seller and buyer must file form 8594, which requires the name, address and federal EIN number of each party.

Our time spent on the sale of a business and issues relating to this sale are billed as extra charge items, even if tax-related.