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Critical Tax Considerations for Installment Sale Transactions: Deal Structures and Planning Techniques for Tax Counsel

Recording of a 90-minute premium CLE/CPE video webinar with Q&A

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Conducted on Wednesday, March 27, 2024

Recorded event now available

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This CLE/CPE webinar will guide counsel and tax professionals on critical tax provisions that could substantially affect the structuring and planning of installment sale transactions for business acquisitions. The panel will discuss critical tax provisions under current tax law for installment sales, certain tax-related aspects of M&A negotiations requiring careful considerations, and best practices to avoid tax pitfalls for M&A deals structured as installment sale transactions.

Description

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, an added layer of complexity occurs if such transactions are structured as installment sale transactions which may result in unintended tax implications if not structured correctly.

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

Generally, factors such as the type of entity for sale, limitations on the deductibility of interest, the use of NOLs, a required withholding tax on the purchase price paid in certain transactions, the imposition of the transition tax, and other factors may impact the structuring and provisions in the agreement. However, for installment sale transactions, other items such as the allocation of consideration for assets being sold under Section 1060 and related regulations, use of a one-day note in an installment sale, and opting out of installment sale reporting must be considered.

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

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Outline

  1. Structuring installment sale transactions in M&A
    1. Seller's considerations in negotiating the transaction
    2. Buyer's considerations in negotiating the transaction
    3. Contractual protections
  2. Key tax implications and planning strategies
    1. Federal tax benefits and challenges
    2. State tax considerations and limitations
    3. Opting out of installment sale reporting
  3. Scenarios and best practices for counsel and tax professionals

Benefits

The panel will review these and other critical issues:

  • Key tax considerations when negotiating and structuring installment sale transactions in M&A
  • How to properly negotiate and draft tax indemnification provisions in a sale agreement
  • Key issues and pitfalls to avoid from both seller and buyer perspectives
  • Federal and state tax pitfalls to avoid
  • Pros and cons of opting out of installment sale reporting
  • Best practices for M&A counsel and tax professionals

Faculty

Stieff, Elizabeth
Elizabeth Fialkowski Stieff
Partner
Venable

Ms. Stieff focuses her practice on tax advisory and planning matters for domestic entities and individuals. She...  |  Read More

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Strafford will process CLE credit for one person on each recording. CPE credit is not available on recordings. All formats include course handouts.

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