2018 Fall issue of Horizons

Impact of Fixed Assets What is good for the purchaser is not good for the seller. Sellers of assets have a reason why they would prefer less of the purchase price to be allocated to fixed assets. Any amount allocated to fixed assets over the net tax value of the assets sold must be

The gain is taxed at the entity level. In order to get the sale proceeds out of the entity to the owners of the C corporation, there will likely be a taxable dividend paid to the owners resulting in double taxation. Careful consideration must be given to what is being acquired when purchasing a business. The natural desire to purchase assets, enhanced due to the law change, could result in a higher purchase price than if purchasing stock/units given the difference in tax treatment.

“recaptured” with the result being ordinary tax treatment rather than capital gain treatment.

Also, if the business being acquired is a C corporation, the gain on the sale of the assets must be recognized by the C corporation which continues to be owned by the seller of the assets with the resulting tax being paid by the C corporation.

TAX SERVICES GROUP

RubinBrown works with our clients to provide tax planning opportunities integrated with business operations to contain or reduce tax function costs, and integrate bottom line results through tax savings and added value. For more information, visit www.RubinBrown.com/Tax .

Henry Rzonca, CPA Partner-In-Charge Federal Tax Services Group 314.290.3350 henry.rzonca@rubinbrown.com

Steve Brown, CPA Chair & Partner Tax Services Group 314.290.3326 steve.brown@rubinbrown.com

Tim Sims, CPA, CGMA Partner-In-Charge Tax Services Group 314.290.3434 tim.sims@rubinbrown.com

How the New Tax Law Affects Merger’s & Acquisitions

16