Asset Sale vs. Stock Sale: Tax Considerations, Advanced Drafting, and Structuring Techniques for Tax Counsel

This CLE/CPE course will provide practical guidance on best practices for tax counsel advising clients buying or selling a business and the tax ramifications of structuring the transaction as an asset sale vs. a stock sale. Each structure has distinct advantages and disadvantages, and tax counsel must advise clients on which approach makes the most sense for the client's particular circumstances. Drafting the appropriate purchase and sale documents to reflect the client's intent is critical. The panel will go beyond the basics to offer valuable tools for structuring a business sale transaction with optimal tax results.

The purchase or sale of a business is often a long, drawn-out process, complicated by the different priorities of the buyer and seller. As a general rule, sellers prefer a stock sale, while buyers prefer an asset sale. However, there are circumstances where these general guidelines do not apply.

Tax counsel advising buyers or sellers must understand the tax ramifications of any planned transaction at the outset to structure the deal in the most tax-efficient way possible.

Factors such as the type of entity for sale and whether the target company is part of an affiliated group filing a consolidated tax return impact the provisions in the agreement. Also, certain elections may be available or advisable in a stock sale. Sophisticated analyses regarding purchase price allocations or transfer tax determinations might be necessary for asset sales.

Listen as our experienced panel provides an in-depth exploration into the negotiating and essential drafting techniques of the purchase and sale of a business from the perspective of both buyer and seller.