hard · Investment Banking

What is the primary difference between a 'Stock Purchase' and an 'Asset Purchase' regarding the tax treatment of asset write-ups?

1. Asset purchases result in the creation of a Deferred Tax Liability (DTL) that is never repaid.
2. In an asset purchase, the write-ups are tax-deductible via depreciation/amortization, whereas in a stock purchase, they are generally not.
3. In a stock purchase, the buyer can immediately expense the full amount of goodwill created.
4. Stock purchases are always preferred by buyers because they allow for the immediate utilization of all target NOLs.

Sign up free to see the explanation and track your rank →