Whyteglov Services: IRC Section 1060 Asset Acquisition

Posted: 25 May 2015

See all articles by Donald Goldman

Donald Goldman

Arizona State University (ASU)

Vanessa Makridis

Maristrata, LLC

Wan-Ting Wu

University of Massachusetts Boston

Date Written: May 21, 2015

Abstract

An asset acquisition allows the buyer to choose specific assets that will be purchased and liabilities that will be assumed, thereby reducing risk of unwanted obligations. This case study draws students’ attention to a critical issue in asset acquisitions under the U.S. federal tax system — the purchase price allocation process specified in IRC 1060. Students are presented with a realistic situation involving the sale of a technology company’s analytics division. To solve the case, students must leverage their understanding of depreciation, amortization, and purchase price allocation rules to assess the competing incentives of the buyer and seller and present the allocations preferred by each party. Students must also perform analyses to determine whether a business case exists for the buyer to assume certain loss-generating contracts from the seller. This case develops students’ critical thinking in interdisciplinary areas (tax, financial accounting, finance, and managerial accounting) and cultivates students’ ability to provide professional tax-planning advice.

Keywords: IRC 1060, asset acquisition, purchase price allocation, purchase/sale, incremental costs and benefits

Suggested Citation

Goldman, Donald and Makridis, Vanessa and Wu, Wan-Ting, Whyteglov Services: IRC Section 1060 Asset Acquisition (May 21, 2015). Available at SSRN: https://ssrn.com/abstract=2609096 or http://dx.doi.org/10.2139/ssrn.2609096

Donald Goldman

Arizona State University (ASU) ( email )

Farmer Building 440G PO Box 872011
Tempe, AZ 85287
United States

Vanessa Makridis

Maristrata, LLC ( email )

United States

Wan-Ting Wu (Contact Author)

University of Massachusetts Boston ( email )

100 Morrissey Boulevard
Boston, MA 02125
United States

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