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Analysis of the Financial and Income Tax Aspects When an Earnout is Used for the Sale of a Business

Contains material from Jan 2020

Analysis of the Financial and Income Tax Aspects When an Earnout is Used for the Sale of a Business
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When a buyer and seller cannot agree upon a price for a business, an earnout is used and may result in selling the business for less than its true value. The materials discuss how earnout formulas can be adjusted to ensure that true value is paid. Because earnouts can result in adverse income tax treatment to the seller, the materials apply the installment sale and OID rules to illustrate the income tax treatment of earnouts and how to eliminate these adverse income tax results.

Includes: Audio Paper Slides

  • Total Credit Hours:
  • 1.00
  • Credit Info
  • TX, CA
  • TX MCLE credit expires: 1/31/2021

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1. Analysis of the Financial and Income Tax Aspects When an Earnout is Used for the Sale of a Business (Jan 2020)

Jerome M. Hesch Esq.

1.00 0.00 0.00 1.00
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(mp3)
60 mins
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16 pgs
Session 1 — 60 mins, credit 1.00
Analysis of the Financial and Income Tax Aspects When an Earnout is Used for the Sale of a Business (Jan 2020)

When a buyer and seller cannot agree upon a price for a business, an earnout is used and may result in selling the business for less than its true value. The materials discuss how earnout formulas can be adjusted to ensure that true value is paid. Because earnouts can result in adverse income tax treatment to the seller, the materials apply the installment sale and OID rules to illustrate the income tax treatment of earnouts and how to eliminate these adverse income tax results.

Originally presented at: Dec 2019 Taxation Conference

Jerome M. Hesch Esq., Adjunct Professor of Law - Miami, FL

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