Set 4 TX Purchase and Sale of assets vs shares Flashcards
Direct asset purchase for purchaser - redundant assets
can choose assets to purchase
Direct asset purchase for purchaser - undisclosed liabilities
not responsible
Direct asset purchase for purchaser - asset bump up
cost and UCC increase to FV of assets - potential for more CCA to be claimed in future
Direct asset purchase for purchaser - goodwill
available to claim CCA in future
Direct asset purchase for purchaser - loss carryovers
not available
Share sale for purchaser - redundant assets
no choice as all assets and liabilities are included
Share sale for purchaser - undisclosed liabilities
purchaser becomes responsible for all liabilities of corporation
Share sale for purchaser - asset bump-up
cost and UCC remain unchanged
Share sale for purchaser - goodwill
goodwill locked in shares, so no future deduction for goodwill
Share sale for purchaser - loss carryovers
may be available, dependant upon acquisition of control
Direct asset purchase for vendor - redundant assets
Vendor may be left with assets purchaser doesn’t want
Direct asset purchase for vendor - undisclosed liabilities
Vendor will be liable
Direct asset purchase for vendor - complexity
More complex - two levels of tax
Direct asset purchase for vendor - lifetime capital gains exemption
NA for sale of assets
Share purchase for vendor - Redundant assets
All assets remain with corporation
