The Impact of Tax Reform on Merger and Acquisition (M&A) Transactions

在评估潜在交易时，买家和卖家总是会考虑税收和税法. Sellers want to make sure that the proceeds they receive, net of their tax liability, are appropriate for what they think the company is worth. Similarly, buyers want to make sure the economic return they make, after paying taxes, will justify their purchase price. Now, 《优德app下载》(TCJA)的条款将于2025年到期，除非立法者延长这些条款, 买卖双方都需要在交易结构上更具战略性.

Stock vs. Asset Deal

一般来说，买家想买资产，卖家想卖股票. The primary reason is that buyers want to avoid any liabilities (known or unknown) that they will assume as part of the purchase of the company stock. In addition, in an asset purchase, buyers take a tax basis in the assets equal to the assigned purchase price that can be amortized or depreciated. In contrast, when acquiring company stock, 买方的折旧和摊销仅限于目标资产的剩余税后净账面价值.

A buyer’s ability to amortize and depreciate the purchase price has always been an attractive aspect of an asset purchase. 2017年通过的TCJA奖金折旧规则的扩大使情况变得更好. Qualified properties (generally, tangible personal property) purchased between 2018–2025, 在确定联邦税时，是否有资格扣除高达20%的QBI(合格企业收入).

In addition, 税收改革扩大了合格财产的定义，包括大多数“使用过的”财产, meaning that buyers can now get an upfront deduction for the portion of the purchase price allocated to such property. 然而，按照目前的法律，折旧扣除将在2025年底取消. 

On the flip side, 卖方通常希望出售股票以使交易按优惠资本利得税率征税. In an asset sale sellers often increase their tax liability because some of the consideration can be taxed as ordinary income rather than capital gain. Sellers of interests in partnerships and LLCs taxed as partnerships generally have a result similar to an asset sale because of special partnership look-through rules.

Most commonly, 普通收入来源于对过去折旧和摊销扣除的重新获取, as well as from the sale of certain assets—such as cash basis accounts receivable—that were not previously taxed because the seller used the cash basis of accounting.  如果企业符合资格，则普通所得税税率的影响可能会降低 IRC 199A deduction (20%的直接扣除)，但总体税率仍然会更高. 同样，除非国会延长，否则这项减税计划将于2025年底到期.

阅读IRC 199A扣除额的最终规定 by clicking here.

Because of the 2017 tax reforms, 更多的企业选择以C公司的形式经营，以利用:

• 降低21%的企业税率(之前为35%);
• the elimination of the corporate alternative minimum tax; and
• certain changes to the international tax system.

The tax benefits of selling stock are even greater for C corporation shareholders because it allows them to avoid the “double tax” of having the corporation pay tax on the asset sale proceeds in addition to the shareholders on the distribution of the sales proceeds.  

Furthermore, 一些符合条件的C公司股票的卖方可能有资格获得资本利得豁免 IRC 1202—not new to tax reform—that will allow them to exclude all or a portion of the gain on the sale of their stock (limited to the greater of $10 million or 10 times the adjusted basis of the stock acquired). 排除的金额取决于股票的收购时间，具体如下:

• 100% for stock acquired after September 27, 2010;
• 75% for stock acquired after February 17, 2009, and before September 28, 2010; and
• 如果在2009年2月18日之前和1993年8月10日之后获得50%

IRC 1202豁免的资格取决于几个因素, including how the stock is acquired, the holding period of the stock, 以及发行股票时的业务类型和规模. For the 50% and 75% exclusions, there is a special tax rate on the portion not excluded, 以及为替代最低税目的所需的某些调整.

Financing and Equity Structures

The 2017 tax reforms provided a limitation on the deductibility of business interest expense to 30 percent of adjusted taxable income. Any interest expense exceeding the threshold was disallowed but can be carried forward indefinitely until such time when it can be utilized. 这一限制可以显著影响税收减免和相关现金流的时间, 因此，在确定收购的理想资本结构时，需要理解和考虑这一点. 

This new limitation applies to businesses with average gross receipts over $25 million; however, taxpayers need to aggregate the gross receipts of certain related parties when determining if they are over the threshold. In addition, businesses that are considered to be tax shelters—because they allocate more than 35% of their losses to limited partners or entrepreneurs—are also subject to the interest limitation. Private equity firms and other buyers utilizing higher percentages of debt will be particularly impacted by this new limitation.

Adjusted taxable income is defined as taxable income without regard to items not related to a trade or business (i.e. investment items); any business interest expense or business interest income, net operating losses, deductions under IRC 199A, and—for years beginning before January 1, 2022—depreciation, amortization, and depletion deductions. Adjusted taxable income is similar to EBITDA, but, as noted below, the definitions in the regulations are limiting and impact taxpayers and the calculations of their interest limitations. 

The regulations under these interest limitations took an expansive view of interest and included most items treated as interest in substance or form, including:

• 合格的声明利息以及债务发行成本的摊销;
• substitute interest payments; and
• guaranteed payments for the use of capital, etc.

Furthermore, the definition of depreciation in the regulations did not include depreciation capitalized to inventory under the Uniform Capitalization (UNICAP) rules and expensed as cost of goods sold.  Therefore, the impact to manufacturers can be significant.

一个潜在的解决方案是利用各种类型的股权. If done properly, 这可以最大限度地减少利息限制的影响，并为买方实现类似的经济结果. However, care is required to ensure that the allocations and distributions are respected—and not reclassified as interest expense.

At this time, 目前还不清楚TCJA到期后利息支出的扣除将如何处理. 你必须密切关注国会通过的议案.

Timing of Transaction

Outside of the change in tax rates, the timing of a sale transaction has generally not been of significant concern when considering the tax consequences to the buyer or the seller. If anything, a seller may have seen a slight benefit when closing a sale transaction early in a year as opposed to later in the previous year to delay the timing of when estimated tax payments related to the sale were required to be paid. 

At a high level, owners of pass-through entities are allowed a deduction equal to the lesser of 20% of qualified business income or 20% of taxable income less capital gains. Generally, 合格的营业收入是来自贸易或业务的收入, if effectively connected with the United States, 除指定的服务行业或业务以外，或以雇员身份提供服务的行业或业务. Investment income and capital gain income (or items taxed as capital gain such as IRC 1231 gain) are not eligible for the 20% deduction.

199A扣除额一般限于以下其中较大者:

• 50% of a pass-through owner's share of the businesses W2 wages; or
• 企业W2工资的25%再加上2.5% of the unadjusted basis of qualified property.

在某种程度上，企业的出售产生了资本收益, 199A扣除将与交易无关. However, as discussed previously, businesses that sell assets or are treated as selling assets can have some or all of the gain from their business taxed as ordinary income. For federal purposes, the top income tax rate for ordinary income can be as high as 37% (and this could go up if new tax laws are not passed by the end of 2025). However, ordinary gain from the sale of a business can be eligible income for 199A purposes if the business income would otherwise be eligible. 取决于交易的一般收入数额, 减税的影响可能是显著的——将该收入的最高税率降至29%.6% if all other requirements are met. 

因为扣除额部分受到企业工资的限制, 出售的时机可能与卖方对普通收入支付的总体税率有关. If, for example, 公司在1月1日出售，而不是12月31日, the seller may have no W2 wages, 而不是以一整年的W2工资来确定W2工资限额. The regulations specifically address this point, 但在收购或处置一项贸易或业务的情况下, or a major portion thereof, where the employees become employees of the acquirer, the wages must be allocated between the buyer and seller based upon the employee wages incurred during each of their ownership periods. 

Furthermore, only property held at the close of the tax year is taken into account for determining the unadjusted basis of qualified property.  As a result, sellers need to monitor the potential ordinary income from a sale transaction and the impact of the wage and property limitations on their potential 199A deduction.

2017年税收改革对企业及其所有者的影响是巨大的. Now that we are a few years removed from the changes and a potential sunsetting date for lower rates and deduction eligibility is on the horizon, 未来几年可能存在不确定性. For anyone considering a transaction在美国国会权衡征税方案之际，关注华盛顿传出的消息将是很重要的.