Re: Purchase of a biz a retail biz in California
I am in a dilemma re: allocation of assets in the purchase price.
I am told that I should keep 2 contradictory considerations to keep in mind:
- The greater the portion of the purchase price in Fixtures, fittings and Equipment the higher the depreciation for the buyer of the biz.
- However, California has sales tax on the Fixtures and Equipment which is close to 10%. So the higher the figure for FF&E, the higher the Sales Tax.
What should I do? Which is better to do?
Go for #1 ie the higher price for FF&E and higher depreciation? or Go for #2 ie lower price for FF&E so I pay lower CA Sales Taxes.
Is there a standard answer to this?
Thank you for your help.