John wants to buy a business whose assets have appreciated in value. If the business is operated as a C corporation, it does not matter to John whether he purchases the assets or the stock.

Question

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When buying a business operated as a C corporation, it matters significantly to the buyer whether they purchase the assets or the stock due to differences in tax implications and liability issues. Asset purchases allow the buyer to step up the basis of the assets to their current market value, potentially offering tax advantages. Stock purchases, on the other hand, do not change the basis of the assets and may also transfer existing liabilities to the buyer.

John Wants to Buy a Business Whose Assets Have Appreciated