Legal Blog

M & A Nuggets: Use Of 338 Tax Election In An Installment Purchase

shutterstock_311143181One of my previous nuggets discussed how a purchaser and seller can structure a transaction legally as a stock purchase but as an asset sale from a tax viewpoint.  This can be accomplished through what is known as a 338 Election.  The 338 Election is often used when a seller refuses to engage in an asset sale or when a business factor, such as the requirement to maintain a major contract in the name of the seller, exists.  In many business purchases, the purchase price is paid over time, in installments.  Unbeknownst to many, the 338 Election can be coupled with an installment purchase.  This can result in benefits for both the purchaser and the seller – the purchaser is able to depreciate or deduct all or substantially all of the purchase price over time; the seller is able to defer gain on the sale over time.  Coupling a 338 Election with an installment purchase can be a huge win-win situation for the purchaser and the seller. manuggets subscribe2

ABOUT GLENN D. SOLOMON

Glenn D. Solomon Esq., is a principal at the law firm of Offit Kurman and has provided counsel to businesses and business owners for more than twenty-five years, with extensive experience in the purchase and sale of businesses, structuring ownership agreements, and advising companies in financial distress

ABOUT OFFIT KURMAN

Offit Kurman is one of the fastest-growing, full-service law firms in the Mid-Atlantic region. With 120 attorneys offering a comprehensive range of services in virtually every legal category, the firm is well positioned to meet the needs of dynamic businesses and the people who own and operate them. Our eight offices serve individual and corporate clients in the Maryland, Delaware, New Jersey, and Northern Virginia markets, as well as the Washington DC, Baltimore, Philadelphia, and New York City metropolitan areas. At Offit Kurman, we are our clients’ most trusted legal advisors, professionals who help maximize and protect business value and personal wealth. In every interaction, we consistently maintain our clients’ confidence by remaining focused on furthering their objectives and achieving their goals in an efficient manner. Trust, knowledge, confidence—in a partner, that’s perfect. You can connect with Offit Kurman via ourBlogFacebookTwitterGoogle+YouTube, and LinkedIn pages.  You can also sign up to received Law Matters, Offit Kurman’s monthly newsletter covering a diverse selection of legal and corporate thought leadership content.

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