inside and outside basis in an asset-sale
Hi,
I've just read a passage on pros and cons in chosing between an asset-sale and stock-sale and have a question regarding the following.
They quote that in case of deciding between the two options, from a pure after-tax proceeds perspective the seller would consider his inside and outside basis. In case of a lower inside basis, the result would be a larger gain on sale, further encouraging the seller to opt against an asset-deal.
Can someone elaborate on that? So far I know that an asset-sale comes with the disadvantage (for the seller) of double-taxation. But wouldn't a greater inside basis (i.e. more assets that could potentially be written-up) lead to a higher tax-burden? Actually I don't really get what the outside basis has to do with it at all.
Thanks in advance!
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