Pit & Quarry, October 2018
in the target entity other than the buyers stock Other provisions of the TCJA such as the full expensing of asset costs may have an impact on an M A transaction In reality the ability to do a taxable asset transaction and take advantage of front loaded deductions may encourage an aggregate business to complete a taxable deal instead of a tax free transaction Consider a situation where a seller really wants cash while the buyer is pushing for a tax free acquisition The tax laws Section 338 permits the aggregate business to make a qualified stock purchase of another business and choose to treat the acquisition as an asset rather than a share acquisition for federal tax purposes The stepped up basis in the qualifying assets can be immediately expensed and written off On the downside the interests and objectives of sellers and buyers are all too often discordant Sellers want the highest price with little or no residual risk or liability Buyers want the lowest price possible with maximum recovery options Recent trends involve more cash ready buyers but with more aversion to risk Whats more buyers are generally unwilling to enter into transactions if the warranty package being offered is too limited or there are concerns over the enforceability of those warranties Obviously these challenges are not insurmountable and deals continue to emerge with and without tax breaks alternative financing or risk insurance Obviously every crushed stone sand and gravel business owner and manager would be well advised to perform their due diligence as well as seek professional advice P Q Mark E Battersby is a freelance writer who has specialized in taxes and finance for the past 25 years Weve been designing and manufacturing custom Pugmill plants in Tennessee for over 30 years STATIONARY PORTABLE SKID MOUNTED 931 388 0626 PugmillSystems com pitandquarry com October 2018 PIT QUARRY 37 ISTOCK COM NANOSTOCKK Mergers and acquisitions are on the upswing with a great deal of the action being smaller deals
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