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Hidden Tax Costs of Buying Stock of a Professional Practice

Hidden Tax Costs of Buying Stock of a Professional Practice


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Richard M. Weber Jr., LLM, CPA
Almost everyone realizes that the sale of an asset will generate tax consequences. But did you know that the purchase of a professional practice can result in higher taxes if the transaction is structured and valued incorrectly? This article examines the tax implications of acquiring a practice by comparing the purchase of assets versus the purchase of stock. Not all practices are corporations but for those that are, buyers will pay the purchase price with after-tax dollars. This type of sale results in a higher total cost to the buyer purchasing stock rather than the assets of a corporation.