Structure decides character and timing
The same economic deal can be taxed very differently depending on how it is built. Selling the shares of a company and selling its assets can produce different results for buyer and seller alike, and the buyer's ability to deduct the cost of what it bought over time often depends on that choice. How the purchase price is allocated among assets affects whether the seller's gain is taxed as capital gain or as ordinary income, and both sides generally report the allocation to the IRS. Payments over time, earnouts, and rollover equity each carry their own timing rules. Pass-through entities such as partnerships and S corporations add another layer, because the owners rather than the entity usually bear the tax.
Agreements that carry tax terms
Purchase agreements commonly allocate pre-closing taxes, include representations about the company's tax filings, and set rules for handling audits that arise after the deal. Elections that treat a share purchase as an asset purchase for tax purposes are available in some deals and are negotiated as part of the price. Withholding may be required in some transactions, including sales of US real property interests by foreign persons. Employment agreements, consulting fees, and non-compete payments tied to the sale can change how part of the price is taxed. State and local taxes, including New York's taxes on real estate transfers, also need to be priced in.
Bringing tax in early
We want to see the term sheet or letter of intent, the entity's tax returns for recent years, its ownership history, and any prior audits or open issues. With that, we can model how different structures would be taxed for each party and identify where your interests and the other side's diverge. If the transaction is not a sale but a refinancing, a contribution of property to a new entity, or a distribution to owners, the same approach applies: map the tax result before the documents are final. Tax positions are far easier to shape at the drafting stage than to defend afterward. We also coordinate with your accountant so that reporting after closing matches what the documents say.
