Sales : Sales And Use Tax

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I. Sales and Use Tax
Generally, purchasers can acquire another business through either an asset sale or stock sale. Since sales tax is maybe imposed on the sale of tangible personal property, the acquisition of a business enterprise through a stock sale generally will not be subject to sale tax. For other good and valid reasons, however, purchasers may want to structure the acquisition of the business as an asset sale. These asset sales, where all or part of the business’s assets are transferred, are commonly referred to as bulk sales for sales tax purposes. Since these asset sales or bulk sales constitute, at least in part, the sale of tangible personal property, they will be subject to sales tax unless a specific exemption applies. A common exemption available to purchasers for asset sales is the “occasional, casual or isolated sale” (“occasional sale”) exemption. An occasional sale exemption generally will exempt the acquisition of assets that are sold in bulk or otherwise outside of the ordinary course of business. Most states provide such an exemption, although the scope of the exemption varies among states. Many states also specifically exclude the transfer of inventory from the occasional sale exemption since the transfer of these items is within the ordinary course of business. A purchaser may avoid the imposition of sales tax on inventory, however, by providing a resale exemption certificate to the seller at the time of purchase. Many states require one

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