Isn't Stock-Sale (always) > Asset-Sale

Reading about asset- and share-deals, I frequently come across the formulation that an asset-deal is disadvantageous to the seller in case it plans liquidating the remaining assets to distribute them to its shareholders (i.e. because of double-taxation).

However, isn't an asset-deal always disadvantageous for the seller from a tax-perspective, as it has to pay a corporate tax upon the gain on sale?

Comments (5)

 
Aug 15, 2019 - 12:30pm

Thanks!

As an addendum, can you tell me what's ment by stock basis in this context? Asset basis is, as I understood, the assets book value prior to a potetntial write-up. But what's a stock basis?

 
Aug 15, 2019 - 1:33pm

Not if it's the sale of a subsidiary. For the sale of a subsidiary, the tax treatment for the seller is generally the same, due to the dividends-received deduction.

Hence why almost all sales of subs are asset-deals or have a 338 election.

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