Series 79 practice questionmediumStock vs Asset Purchases
Which of the following is an advantage to the buyer in an asset purchase versus a stock purchase?
- AAutomatic transfer of all contracts and permits
- BRetention of the target’s NOL carryforwards
- CSelected liabilities plus tax-basis step-up✓ Correct answer
- DEasier transfer of existing debt financing
Explanation
Why C — Selected liabilities plus tax-basis step-up
Asset purchases allow buyers to choose which liabilities to assume and obtain a step-up in tax basis for assets, unlike stock deals. Mistaking the automatic transfer of contracts is a common misunderstanding.
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