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?
Not if you have NOL of previous years that you can deduct from the book profit on the sale of this year.
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?
You made the assumption that every asset sale is made at a gain
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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