The Buyer's Receipt Model for the Tax Consequences of the Assumption of Liabilities in Asset Purchases

Abstract:     
This paper offers an approach to taxing liability assumptions made in the context of taxable aquisitions of the assets of ongoing businesses. It suggests that the buyer be viewed as having received a payment from the seller to cover the expected value of the assumed liabilities and to compensate for the risk involved in the assumption. More importantly, the paper highlights the fact that it will be impossible to assign a value to the assets transferred without taking into account the tax treatment to be given to the assumed liabilities.

This paper was widely circulated in 1991.

Number of Pages in PDF File: 50

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