A 338 H 10 entity purchase can be highly advantageous for both buyers and sellers in the home care industry. This tax code provision allows for the acquisition of a business’s assets rather than its stock, which can have significant benefits for both parties involved.
Advantages for Buyers:
- Step-Up in Basis: Buyers can receive a step-up in the tax basis of the assets, which means they can depreciate the assets more quickly. This leads to potential tax savings in the future.
- Selective Asset Acquisition: Buyers can choose specific assets they want to acquire, allowing them to avoid unwanted liabilities or under-performing assets.
- Enhanced Cash Flow: As a result of the step-up in basis and selective acquisition, buyers may experience improved cash flow from the outset.
Advantages for Sellers:
- Tax Benefits: Sellers may benefit from capital gains treatment on the sale of assets, which can be more favorable than ordinary income tax rates.
- Attracting Buyers: The structure of a 338 H 10 transaction can make a business more appealing to potential buyers who are looking for tax efficiencies.
- Streamlined Exit Strategy: For sellers, this method provides a clear path to exit, as it simplifies the transfer of ownership and can lead to a faster transaction.
Steps for Implementation:
- Consult a Tax Advisor: Engage a professional to understand the full implications of a 338 H 10 transaction for both parties.
- Conduct Due Diligence: Evaluate the assets and liabilities carefully to ensure a beneficial deal structure.
- Prepare for Negotiation: Understand the motivations of both parties to create a win-win scenario.
CALL 480-407-6138
