Key Points - Allocation of Business Purchase Price
Consistency between the seller and buyer in their reporting of the allocation is important. Work with professionals (licensed and/or accredited Florida Business Brokers, CPA's, attorneys) in these transactions to save you time and money down the line. Tax laws change frequently, so treat this article as a guideline subject to change by the IRS, and subject to interpretation by the appropriate professionals/advisors.
The larger the transaction the more likely there will have to be a formal valuation some, or many of the various asset values may be indicated.
About the Author
Jim Pease, CPA, is a licensed CPA in the state of California, and is a principal at W. H. Mayer Accountancy Corporation in Pleasanton, CA. He specializes in taxes, business accounting, business valuation and business acquisitions/sales.
Ron Johnson, CBI, MM&AI, Fellow of the IBBA, is president of Allen Business Investments and principal of Onyx Associates, both in San Ramon, CA. Allen Business Investments specializes in the sales of Main Street businesses, in the sales of non-public firms with revenues less than $10 million. Onyx Associates is a mergers and acquisitions firm specializing in privately-held companies with revenues up to $50 million. Ron is a past president of the California Association of Business Brokers (CABB), and an active member of the International Business Brokers Association (IBBA). You can email Ron at firstname.lastname@example.org.Section 1: Allocation of Purchase Price
Section 2: Stock Sale - Allocation of Purchase Price
Section 3: Non-Stock Sale - Allocation of Purchase Price
Section 4: Tax Implications - General Guidelines
Section 5: Key Points - Allocation of Purchase Price