Middle market companies are up against challenges when they seek to increase their market position through mergers and acquisitions. Whether you're selling in a rising market or want to diversify your portfolio with business purchases, the approach would be the same; bring your tax team to the table and make them do tax planning for acquisitions in Texas.
To help clients succeed, the tax team draws on their extensive mergers and acquisitions knowledge as well as a rigorous approach. They have seasoned tax consultants that have extensive experience advising buyers and sellers on tax elements of mergers and acquisitions transactions and can assist you in maximizing the value of your transactions.
In mergers and acquisitions, taxes are a crucial factor to consider. A business purchase can be organized as an asset purchase or a stock transaction in most cases. In an asset purchase, the buyer can buy all or some of the company's assets. If the target firm is a corporation or a limited liability company, the buyer can purchase the seller's ownership stake in the business when purchasing shares. For this reason, tax planning for acquisitions in Texas helps people make wise decisions.
Purchasing Assets
You must distribute the overall purchase price to the specific assets purchased when making an asset acquisition. Each asset's initial tax basis is determined by its amount. The initial taxable income of any depreciable and amortizable asset affects the post-acquisition amortization and depreciation deductions for that asset.
Pass-Through Businesses
If you run the newly acquired business, post-acquisition losses, profits, and income are transferred to you and shown on your own federal income tax statement. Sole proprietorship, s corporations, partnerships, single-member LLCs, and multimember LLCs are a few examples of pass-through entities.
Choosing a Purchase Price
The most important tax-saving opportunity with an asset purchase is how you allocate the entire purchase price to the various purchased assets.
Wrapping It!
In some cases, buying a firm gives a buyer the option to restructure the company's activities into a more tax-efficient form. Many firms, particularly start-ups, have developed from scratch. Tax planning in the early phases of a company's life will usually allow it to be structured in a tax-efficient way. However, in the actual world, committing capital to tax preparation during the early phases of a corporation is frequently not done. As a result, professional teams offering tax planning for acquisitions in Texas could assist a large number of firms.
