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Our business blog focuses on issues affecting Virginia, D.C. and Maryland business owners as well as those in other jurisdictions throughout the country. We provide timely insight and commentary on federal and state rules and how they affect you. If you are interested in having us cover a specific topic, please let us know.

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Posts in Asset Allocation.
July 2017
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Tags Taxes

Purchase price allocation and timing of payments are two of the issues to consider when structuring an asset sale or purchase of a business. The tax consequences can be enormous if assets aren’t allocated strategically.

Consider this scenario based on an actual client. John is an entrepreneur who starts a roofing company. John works very hard and builds up his business over the next seven years so that it is generating $500,000 per year. John is approached by a national roofing company that wants to purchase his business for $1,000,000, plus an earn out of $500,000 for the next 12 months and a promise that John will not compete with the sold business.