One set of tax costs that is often overlooked when planning transactions, especially with tax-free re-organizations, is the imposition of state and local taxes (ie - sales/use and real estate transfer taxes). While the transactional and prospective state and local tax costs are a contemplated transaction, they have the potential to be quite significant. The cost of restructuring a transaction to reduce or even avoid such tax burdens is often minimal.
We review proposed acquisitions and divestitures of assets, business operations and business entities to assist our clients in identifying and minimizing the state and local tax implications. Our staff can often suggest ways of restructuring contemplated acquisitions to minimize the SALT (State & Local Taxes) implications of the transactions without altering the indented federal income tax consequences of business purpose underlying the transaction.