Purchase Price Allocation

If you are selling a business, there are post-closing valuation opportunities could help reduce your tax burden. For example, Nebraska-based sellers conducting business outside the state may qualify for an income exclusion, depending on the nexus of the assets sold. If your transaction included significant intangible value, a purchase price allocation may substantially lower your Nebraska individual income tax liability. We also perform purchase price allocations for GAAP financial reporting to support opening balance sheet preparation for acquirers.

What is a Purchase Price Allocation?

When acquiring a business, you must determine the fair value of all assets and liabilities assumed. This process, typically performed by an independent expert, helps you understand the value of consideration paid and how to appropriately allocate tangible and intangible assets. Any remaining value is recorded as goodwill. Both the buyer and seller must report this allocation on their tax returns in the year of sale to comply with IRS and state regulations.

Completing a purchase price allocation can be a complex task. The professionals at Lutz M&A have the expertise necessary to ensure tax compliance and accurate financial reporting.