Structure drives tax outcome, and the tax outcome frequently drives price.

Asset purchase. The buyer takes a stepped-up basis in the assets and future depreciation and amortization deductions. A corporate seller may face two levels of tax. Purchase price allocation among asset classes is agreed and reported consistently by both parties.

Stock purchase. The seller generally recognizes capital gain at one level. The buyer takes carryover basis in the assets, losing the step-up, and inherits historic liabilities including tax.

Elections bridging the two. Certain elections treat a stock purchase as an asset purchase for tax purposes, giving the buyer a step-up while preserving the legal form. Eligibility depends on the target’s tax classification and on the percentage acquired, and the seller’s incremental tax is typically compensated by a gross-up.

Pre-transaction restructurings are common to convert a target into a form that permits a step-up.

Qualified small business stock may exclude a substantial portion of gain for eligible holders, which strongly favors a stock sale and requires the holding period and other conditions to be confirmed early.

Rollover equity can be structured for deferral, which constrains the acquisition structure.

Transfer taxes on real property and certain assets belong in the model.