Educational only. Not legal, tax, or financial advice. NewHands is not a broker-dealer. Verify state rules with counsel before you rely on them.
Asset sale or stock sale
The tax shape of the deal, in plain language, with the forms to read.
This is educational. It is not tax advice. The right structure is a question for your CPA and your lawyer, using this year's law.
In an asset sale the buyer purchases assets — equipment, inventory, goodwill, sometimes the real estate — and generally does not take the entity's old liabilities unless they agree to. The seller often has a mix of capital gain and ordinary income. Depreciation recapture on personal property can be ordinary. Allocation of the price among asset classes is reported on IRS Form 8594 when Section 1060 applies. Publication 544 is the IRS overview of sales and dispositions.
In a stock sale (or a sale of membership interests) the buyer takes the entity as it is, including unknown liabilities, and the seller often has a simpler capital gain. Buyers pay less enthusiasm for that unless the license or a contract cannot move.
Most Main Street deals in this region are asset sales for that reason. Say which one you mean in the LOI. Do not let a template pick it silently.
State taxes and transfer taxes are separate. The New England notes link each revenue department and do not quote a rate.
Sources
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