“Yes, the buyer wants me to invest 10 per cent of my equity – it gives me the chance to participate in the growth of the business after the sale, including the business of all the other companies that can be acquired. A second bite on the apple, you might say. “Yes, the step allows the buyer to recover his purchase price through depreciation, depreciation and immediate expenses, which makes the agreement more economical for them, but generally more expensive for you. Good practice dictates the use of a transaction agreement called “contribution agreement” and not a “purchase agreement” where the parties intend to tax rollover capital for rollover participants. The characterization of the booking form as a purchase of shares or assets invites an IRS agent`s argument that the form of the booking requires tax treatment. The use of a contribution agreement ensures that the form of the transaction is a form in which the standard is tax-free (subject to cash management). In the contribution agreement, it is also useful to describe in detail the tax aspects of the transaction, including recognition by rollover buyers and participants, that the transaction involves at least partially a tax-exempt rollover. At least, a sales contract should clearly state that the rollover equity of the transaction is governed by CRI 351 or 721 and is intended by the parties for a tax-exempt exchange and not an acquisition of equity. Buyers considering using tax re-organizations must balance the benefits of using their shares in return for the loss of the tax base for the portion of the transaction that includes the buyer`s capital. The ability to structure the rollover with asset purchase transactions will help satisfy the desire to avoid unwanted liabilities of target companies. One of the advantages of the “F” reorganization drop-down list is that the target company (the company converted to LLC) can retain its former UN and that there is no transfer of capital for public law purposes. The flip side of this structure is that the financial buyer acquires equity in an existing business, which may have unknown liabilities and which has legal problems based on its operating history.