Re: Purchase of a biz a retail biz in California

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:

1. The greater the portion of the purchase price in Fixtures, fittings and Equipment the higher the depreciation for the buyer of the biz.

1. 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.