Series 79 practice questionmediumStock vs Asset Purchases
In an asset purchase, what is the main tax advantage for the acquirer compared to a stock purchase?
- ANo need to obtain third-party consents
- BAbility to avoid all liabilities
- CStep-up in the tax basis of the acquired assets✓ Correct answer
- DAutomatic transfer of all contracts and permits
Explanation
Why C — Step-up in the tax basis of the acquired assets
Asset sales let buyers step up the tax basis, improving future depreciation. Trap answers confuse this with non-tax benefits or exaggerate liability avoidance.
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