When the Structure’s Off, So Is the Outcome
A merger or acquisition can create or destroy value long before the deal closes, and the difference often comes down to tax due diligence. A stock purchase treated the wrong way, a missed election deadline, or an overlooked cross-border exposure can turn a strong deal into a costly one, sometimes years after the ink is dry.
Erik Lincoln brings a dual JD/CPA credential, decades of combined experience as a former Big Four tax manager at Ernst & Young and a former BigLaw equity partner at Moore & Van Allen, and admission to the U.S. Tax Court to every transaction our firm reviews. He has been recognized by Super Lawyers, named to Best Lawyers in America, and honored on Business North Carolina’s Legal Elite list for tax.
That combination lets us evaluate a deal’s legal structure and its tax consequences side by side, rather than looping in separate advisors after the terms are already set. Our business law team works alongside our tax due diligence process so structuring decisions and deal documents move in the same direction from the start.
Areas of M&A Tax Due Diligence Counsel
We support buyers, sellers, and their advisors across every stage of a business transaction.
Asset vs. Stock
Deal Structuring
We evaluate the tax and liability tradeoffs of an asset purchase against a stock purchase before the deal terms are finalized, so the structure supports the outcome both sides expect. See our related coverage on successor liability in asset purchases.
Section 338(h)(10) and
336(e) Elections
We advise buyers and sellers on elections that treat a qualified stock purchase as an asset purchase for tax purposes, including the strict filing deadlines each election carries.
Tax Due Diligence for Business Acquisitions
We support both buy-side and sell-side due diligence, gathering and reviewing a target company’s filings and elections, quantifying potential exposure, and working alongside the rest of the deal team rather than duplicating their work.
Deal Structuring for Tax Efficiency
We help buyers and sellers structure the transaction itself, from purchase price allocation to entity choice, so the deal holds up under later scrutiny.
M&A Tax Counsel for Every Stage of the Transaction
Lincoln Tax & Business Attorneys help businesses structure transactions that protect long-term value and reduce compliance risk.
Section 368 Tax-Free Reorganization Counsel
We structure mergers and stock-for-stock transactions to qualify as tax-free reorganizations where the deal and the parties’ goals support it.
- Type A, B, and C reorganization qualification
- Continuity of interest and business enterprise requirements
- Boot allocation and gain recognition planning
- Reorganization documentation and IRS ruling requests
- Coordination with state law merger requirements
Cross-Border M&A Tax Structuring
We address withholding, treaty, and reporting issues that arise when a transaction crosses U.S. borders in either direction.
- FIRPTA withholding on U.S. real property interests
- Permanent establishment and treaty-based deal structuring
- Section 1446(f) withholding on foreign partner transfers
- Cross-border earnout and indemnity tax treatment
- Post-acquisition international reporting compliance
Earnout Tax Structuring
We help buyers and sellers allocate and time contingent purchase price so the tax treatment matches the parties’ intent.
- Earnout payment characterization and timing
- Contingent purchase price allocation
- Working capital and true-up adjustments
- Indemnity escrow tax treatment
Post-Closing Tax Integration
We help clients align entity structure and tax positions once a transaction closes, so the deal’s intended benefits actually materialize.
- Consolidated return elections after closing
- Intercompany transaction and structure cleanup
Frequently Asked Questions
What is the difference between an asset purchase and a stock purchase for tax purposes?
An asset purchase generally lets the buyer take a stepped-up basis in the acquired assets, while a stock purchase preserves the target’s existing basis unless an election such as Section 338(h)(10) applies. The right choice depends on the assets involved, the seller’s tax position, and the liabilities each side is willing to assume.
When does a Section 338(h)(10) election make sense?
It can make sense when the target is an S corporation or a subsidiary of a consolidated group and the buyer wants asset-basis treatment without restructuring the deal as an asset sale. Both parties must consent, and the election has a strict filing deadline.
How does cross-border M&A change the tax analysis?
Cross-border deals add withholding obligations, treaty analysis, and reporting requirements that a purely domestic transaction does not face. These issues are best identified during due diligence, before the purchase agreement is finalized.
What should be reviewed during M&A tax due diligence?
A thorough review typically covers the target’s prior tax filings, existing elections, and any contingent liabilities that could transfer to the buyer depending on how the deal is structured.
Can an earnout be structured to reduce tax exposure?
Earnout timing and characterization can affect when and how contingent payments are taxed. Structuring this correctly at the outset can help prevent disputes over allocation later.
Trusted for the Transactions That Matter
Our team of transactional lawyers balances legal insight with a real-world perspective, delivering the clarity and focus high-stakes decisions demand.
Put Experience on Your Side
Whether you’re Erik Lincoln has been recognized by Super Lawyers across multiple years and Business North Carolina’s Legal Elite, and works with CPAs and attorneys nationwide from Lincoln PLLC’s Charlotte headquarters. If you are structuring or evaluating a business transaction, schedule a consultation to discuss the tax due diligence your deal need’s.