If you are considering buying an incorporated business (the target company), you would probably prefer to buy the company’s assets as opposed to buying its stock.
That’s because you as the buyer can step up (increase) the tax basis of the purchased assets to reflect the purchase price.
The step-up results in higher post-purchase depreciation and amortization deductions for depreciable and amortizable assets, and lower taxable gains when other assets (such as receivables and inventory) are sold or converted into cash.
But all is not rosy. Asset purchases also have some negative considerations for buyers. For example, if the target company owns ... Log in to view full article.