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April 2018

Having Your Cake and Eating It Too: Getting Asset Sale Tax Treatments in a Stock Sale

By Kelly L. Frey, Amelia C. Lant

Nashville Bar Journal

Reprinted with permission from the Nashville Bar Association

Transactional attorneys are taught early in their careers that there are two types of M&A (Merger and Acquisition) transactions: stock deals and asset deals. Unfortunately, that dichotomy is practically wrong and can cost mid-market, closely held companies millions of dollars (and create potential malpractice claims by clients who become aware of the knowledge gap of their counsel after the transaction is completed).

Section 338(h)(10) of the Internal Revenue Code allows certain transactions to be structured as stock deals, but taxed as asset deals.