In an asset purchase/338(h)(10) election, the seller pays tax on the assets (i.e., tax rate x (purchase price - tax basis)), and the buyer gets a stepped up tax basis in the assets equal to the purchase price allocated to each asset (so the buyer gets to save on taxes by depreciating the full value of the assets). Since the tax basis = book value of the assets in an asset purchase, we usually don't create any DTLs. So far, so good.
Here's my question. If we assume different amort/depreciation periods for gaap and tax purposes after the transaction, we're going to have temporary differences between book and cash taxes. For example, what if we use accelerated depreciation for tax and straight line for gaap? Shouldn't that create a DTL even in an asset purchase? The logic seems to say yes, but every merger model I've ever seen assumes you never have DTLs after an asset purchase.
I've never seen this either my guess would be just to apply Occam's Razor. For the sake of parsimony, models would assume the same depreciation timelines in a book and tax basis, which would avoid creating a DTL.
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