Buying a business? Make tax-smart price allocations!

You can generally avoid exposure to unknown or undisclosed business liabilities.
The tax-basis of the assets can be stepped up (increased) to reflect the purchase price that you pay for the business. The step-up gives you bigger depreciation and amortization deductions.

But there’s another big “win” you should also be aware of.

If you structure your deal as an asset purchase, you can use smart price-allocation strategies to slash your tax bill.

Want to find out more? All will be explained when you read my new article titled Tax Tips: Buying a Business: How to Make Tax-Smart Price Allocations?

We’ll explain “price allocation” basics. If you want to save the most money possible (and who doesn’t?), you’ll want to allocate as much as possible to three classes of assets. We’ll tell you exactly what they are when you read the full article.
You’ll learn how to use the required “residual allocation” method. Under the federal income tax rules, you must use the so-called “residual method” to allocate the total purchase price to the specific assets you’ve acquired. There are four steps you’ll need to take which we’ll explain fully when you read the full article.
We’ll tell you why the appraisal process is so important. Let’s face it. Appraising the fair market value of business assets is more an art than a science. Which means there can be several legitimate appraisals for the same assets. As you can imagine, how you play the appraisal game can make a big difference to the profitability of your transaction. All will be explained when you read the full article.
We’ll show you how to stay out of the IRS’s gun sights. It is definitely in your best interests to make sure that the seller reports the same allocations on the Form 8594 as you report on your form. A discrepancy in the numbers can invite a detailed IRS audit. If you want to stay on the right side of the law, read the full article.