Series 79 practice questionmediumStock vs Asset Purchases
Which is a major advantage of an asset purchase for a buyer compared to a stock purchase?
- AAll contracts automatically transfer to the buyer
- BBuyer can selectively assume liabilities and gain a step-up in tax basis of acquired assets✓ Correct answer
- CNo need for counterparty consent on material contracts
- DSeller retains any net operating losses
Explanation
Why B — Buyer can selectively assume liabilities and gain a step-up in tax basis of acquired assets
Asset purchases allow buyers to pick which assets and liabilities to assume and provide a step-up in asset basis for tax purposes. Automatic contract transfer is not guaranteed, and consents may still be needed.
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