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* Stock Sales. In a stock sale, the buyer purchases the outstanding stock issue by the selling corporation ? or in the case of an LLC, the outstanding membership interests. The buyer typically assumes all liabilities of the Seller, unless otherwise agreed by the parties. The Buyer gets a carry-over basis in seller?s assets. Seller?s shareholders will pay taxes on the appreciation in their shares. Sellers will usually prefer stock sales due to the advantageous tax position as well as the assumption of liabilities (creating a clean break for the seller?s shareholders).

* Asset Sales. In an asset sale, the buyer purchases seller?s assets, and assumes only those liabilities that it agrees to assume. Any liabilities not assumed remain the obligation of the Seller. Typically the selling company with distribute the sale proceeds to its shareholders via a dividend. With the exception of a pass through entity, the selling company will pay taxes on the asset sale, and the shareholders will pay taxes on the dividend. The buyer gets a stepped-up basis in seller?s assets. Buyers usually prefer an asset sale to a stock sale.

* Mergers. In a merger, the target company (i.e. the seller) typically merges with and into the buyer company ? which survives the merger. This is typically accomplished by the buyer converting the stock owned by seller?s shareholders into the consideration given for the merger

* Tax-Free Reorganizations. Although there are many forms of a tax-free reorganization, the basic concept of a tax-free reorganization is that buyer pays the purchase price by using buyer?s own stock as the consideration, which results in a tax free transaction, except to the exten