Tax Law Puts Pressure on Deemed Asset Acquisition Rules

Jay Singer discussed the new tax bill’s impact on corporate restructurings. With full expensing under the bill, the seller would not have any basis in a write-off’s assets during the first year, so the seller would have deemed sale gain to the full market value of the target. The buyer acquires immediate basis with an immediate write-off. “In a deal context, this will materially change the math in negotiating how much a buyer might be willing to pay a seller to make that election,” Mr. Singer said.