Most business sales fall into one of two types: Stock or asset sales.
Stock sales are favored by sellers since gains are subject to preferential capital gains treatment. Losses can be subject to Section 1244 which gives a greater amount of write offs than straight capital losses. Buyers tend to favor asset sales since depreciation and amortization allow recovery of the purchase price.
These conflicting objectives usually can be resolved as a part of the negotiation process. While asset sales are not as favorable as stock sales for the seller, there are some ways of structuring the deal to help minimize the tax impact on the seller without making the buyer give us some of his favorable tax attributes. Because of the potential significant tax impact, the final sales price should be inclusive of the tax consequences.
Another way to minimize or even eliminate any tax implications is to spin off a part of your business in order to divide business between owners. While the IRS rules can be little bit burdensome and intricate, dividing the business can be a perfect method of transferring assets, strengthening the control, and ensuring of appropriate transition to successors or new buyers when time arrives.
