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Asset vs. Stock Sales: Weighing Tax Consequences of the Buyer and Seller, Section 338 Elections

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Thursday, January 9, 2025

Recorded event now available

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This webinar will compare and contrast the tax consequences of asset and stock sales. Our astute panel of federal income tax experts will provide examples of business sales under both scenarios, outline the reporting responsibilities for asset and stock sales, and point out when an election under Section 338 could benefit a purchaser.

Description

Whether a sale is structured as an asset sale or a stock sale dramatically impacts the amount realized from the sale of a business. The types of assets sold, whether real estate and intangible assets or tangible assets and inventory, heavily weigh in the decision. Further compounding the choice is whether you are representing, or are, the buyer or the seller in the transaction. Favorable tax consequences for one party can be detrimental to the other.

A few of the benefits of asset sales include being able to price assets individually, not acquiring the company's debt, and, depending on the nature of assets purchased, the ability to write off the purchase price of certain business assets expeditiously using accelerated depreciation or under Section 179.

Benefits of stock sales include not having to price assets individually, allowing the prior owner to separate from the business entirely, and, for the seller, capital gains treatment on the sale. A proper Section 338 election allows certain buyers a step-up in basis for assets purchased via a stock sale.

Listen as our panel of tax and financial experts explains critical considerations when structuring the sale of a business. Businesses and tax advisers need to understand the tax ramifications of choosing an asset or stock sale in order to maximize a seller's gain or minimize a buyer's cost.

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Outline

  1. Asset vs. stock sales: introduction
  2. Asset sales
  3. Stock sales
  4. Special elections
    1. Section 338(h)(10)
    2. Section 338(g)
  5. Reporting requirements
    1. Form 8833, Asset Allocation Statement Under Section 338
    2. Form 8594, Asset Acquisition Statement Under Section 1060
    3. Other
  6. Examples

Benefits

The panel will cover these and other critical issues:

  • When a purchaser should consider making an election under Section 338(h)(10)
  • Completing Form 8594, Asset Acquisition Statement Under Section 1060
  • Tax calculations contrasting asset and stock sales from the seller's and purchaser's perspectives
  • The impact of depreciation recapture on a sale of assets

Faculty

Gallegos, Mark
Mark Gallegos
CPA, MST
Porte Brown

Mr. Gallegos, CPA, MST, is a tax partner on Porte Brown’s accounting and consulting services team in...  |  Read More

Mandarino, Joseph
Joseph C. Mandarino
Partner
Smith Gambrell & Russell

Mr. Mandarino's practice focuses on corporate, tax and finance law. He is involved with a wide variety of...  |  Read More

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