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Asset Buyer’s Substance Over Form Argument Wins $3 Million Amortization Deduction

The IRS challenged the buyer’s $3 million amortization deduction in an asset acquisition based upon the structure chosen by the parties to the transaction. The tax court however, allowed the amortization deduction based upon the economic substance of the transaction.

Posted in amortization, form over substance, substance over form, Taxation Tagged with: ,

Chosen Merger Structure Accelerates over $2 million in Taxes for Seller

July 21, 2020 Introduction Selling a business usually generates significant tax consequences. However, a transaction can sometimes be structured to defer the payment of taxes. The deal The business owner held the KFC and Pizza Hut franchises in Russia through

Posted in boot, cash, form over substance, merger, substance over form, tax deferred reorganization Tagged with: ,

$2.8 Million Tax Cost for Failure to Follow Planned Structure of Subsidiary Sale

July 6, 2020 Introduction The formalities of a sale of a business can have significant tax consequences to the owners. It is important that the preferred structure of the sale is implemented. And that means that the seller and the

Posted in mutual mistake, structure of transaction, Taxation Tagged with: ,

Seller of golf company battles buyer over right to $16.6 million VAT receivables as tax credit

In late 2010, Seller decided to sell Target (a wholly-owned subsidiary engaged in the manufacture and distribution of golf products, including Titleist-brand golf clubs, balls and tees and Footjoy-brand golf shoes) by way of auction. The eventual winning bidder was

Posted in allocation of preclosing taxes refunds and credits, net working capital adjustment, stock purchase agreement, Taxation, value added tax or VAT

Use of independent sales representatives subject out of state company to WA gross receipts tax

Today I want to talk about how your company may have more exposure to states in your market that have a gross receipts tax as opposed to an income tax. Let’s say you are a company that makes goods in

Posted in Taxation

Sale of servers and related computer equipment in divestiture of IT division is an occasional sale under NC sales tax law

Today I want to talk about the sales tax cost of selling or buying the assets of a business.  The buyer and seller of a business often argue over who will pay any sales tax on the tangible personal property,

Posted in Taxation

IL explains its sales and use taxation of a fee for providing a MLM mobile application program to its distributors

Today I want to talk about a multi-level marketing company (“MLM”) that sells its nutritional and diet products through its independent distributors. The MLM charges its distributors a fee to use its mobile application program. The MLM is not based

Posted in Taxation

Sales income earned from product shipped from Indiana to other states thrown back to Indiana

Today I want to talk about how sales income from product shipped out of state can be taxed by the state from which the product was shipped. People in the trade call this the throwback rule. An example of the

Posted in Taxation

South Carolina wants Amazon to collect use tax on sales made on its platform by 3rd party sellers to South Carolina residents

Today I want to talk about selling through Amazon’s Fulfillment by Amazon (“FBA”) program. Let’s say your Arizona based company sells books on Amazon through the FBA program. For a FBA fee, your books are stored by Amazon. Amazon’s website

Posted in Taxation

Profit from sale of joint venture interest apportioned along with company’s other multistate net income

Today I want to talk about a multistate business that grows by joint venturing with another business. Specifically, let’s look at when the company exits from the joint venture with a sizable profit. Most states would tax the profit (or

Posted in Taxation

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