World Class Mergers & Acquisitions  |  For Companies $5 Million to $100 Million in Revenue

Merger & Acquisition FAQ – June 2015

Q: If I lease office furniture with the option to buy, when do I depreciate the purchase price?

A: You must first determine whether the agreement is a conditional sales contract or a lease agreement. If you gain equity or title in an item as you lease it, the agreement more resembles a conditional sales contract. Payments under such an agreement are not deductible in the same way as rent. You should start depreciating the furniture as of the date of the acquisition if you are holding a conditional sales contract.

On the other hand, if the agreement is a true lease agreement, it is appropriate to expense the payments as they are made as rental expense.

Q: Are business gifts deductible?

 A: Generally yes; however, business gifts are limited to an amount of $25. If the person giving the gift exceeds this amount, the excess is nondeductible.

 Q: I am exchanging property in a 1031 “like-kind-exchange”. Can I exchange my one property for more than one property?

 A: Yes. As long as the property being exchanged is within the same class, you may exchange the property for more than one property. When dealing with real estate, you can exchange one property for up to 3 properties.

By: Basi & Basi at the Center for Financial, Legal and Tax Planning for Transworld M&A Advisors