Assets referred to in "sale of all, or substantially all, assets"

Discussion in 'Tax' started by John, May 27, 2005.

  1. John

    John Guest

    I know a definitive answer is probably too much to ask for,
    but I can hope...

    "Sales of all, or substantially all, assets" is a common
    phrase. What assets are meant; all assets including cash
    (how does one sell cash?), all assets excluding cash (why is
    cash excluded?), or operating assets? What percentage of
    assets is "substantially all", 51%, 99%? Or is it all vague
    and designed to elicit litigation?

    If someone can point to a definitive reference for this, I
    will name my next child after you.

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    John, May 27, 2005
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  2. John

    Phil Marti Guest

    "John" <> wrote:

    > "Sales of all, or substantially all, assets" is a common
    > phrase. What assets are meant; all assets including cash
    > (how does one sell cash?), all assets excluding cash (why is
    > cash excluded?), or operating assets? What percentage of
    > assets is "substantially all", 51%, 99%? Or is it all vague
    > and designed to elicit litigation?


    Laws written by lawyers designed to be vague enough to put
    lawyers' children through school and the orthodontist?
    Pshaw!

    Some context would help. Standing alone it sounds like
    Unified Commercial Code terminology, possibly involving bulk
    sales?

    --
    Phil Marti
    Clarksburg, MD

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    Phil Marti, May 31, 2005
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  3. "John" <> wrote
    > I know a definitive answer is probably too much to ask for,
    > but I can hope...
    >
    > "Sales of all, or substantially all, assets" is a common
    > phrase. What assets are meant; all assets including cash
    > (how does one sell cash?), all assets excluding cash (why is
    > cash excluded?), or operating assets? What percentage of
    > assets is "substantially all", 51%, 99%? Or is it all vague
    > and designed to elicit litigation?


    It's probably designed more on the side of avoiding
    litigation. If I were to buy a business, and we agreed that
    I was buying all assets, and you walked off with the picture
    of your wife and kids that was on your desk, then I'd
    probably sue for the picture frame......as that could have
    been (and probably was) a company asset.

    It is always a prudent thing to have a written listing of
    the specific assets that are being bought. It should be
    specific enough to identify those assets included in the
    sale, but loose enough to allow for breakage /consumption.
    As in a bar or resturant where there is breakable glassware,
    or in the listing of office/sales supplies.

    > If someone can point to a definitive reference for this, I
    > will name my next child after you.


    Please don't.

    --
    Paul A. Thomas, CPA
    Athens, Georgia
    taxman at negia.net

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    Paul A Thomas, May 31, 2005
    #3
  4. Re: Assets referred to in "sale of all, or substantially all,

    "John" <> wrote:

    > I know a definitive answer is probably too much to ask for,
    > but I can hope...
    >
    > "Sales of all, or substantially all, assets" is a common
    > phrase. What assets are meant; all assets including cash
    > (how does one sell cash?), all assets excluding cash (why is
    > cash excluded?), or operating assets? What percentage of
    > assets is "substantially all", 51%, 99%? Or is it all vague
    > and designed to elicit litigation?
    >
    > If someone can point to a definitive reference for this, I
    > will name my next child after you.


    The world is not ready for another David Woods. Having said
    that, there MANY SPECIFIC references in the code and
    regulations as to what the percentage is.

    --
    David M. Woods, EA, ChFC, CLU
    Woods Financial Services
    Norwood, MA 02062
    www.woods-financial.com

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    David Woods, EA, ChFC, CLU, May 31, 2005
    #4
  5. John

    Bruce Raskin Guest

    "John" <> wrote:

    > I know a definitive answer is probably too much to ask for,
    > but I can hope...
    >
    > "Sales of all, or substantially all, assets" is a common
    > phrase. What assets are meant; all assets including cash
    > (how does one sell cash?), all assets excluding cash (why is
    > cash excluded?), or operating assets? What percentage of
    > assets is "substantially all", 51%, 99%? Or is it all vague
    > and designed to elicit litigation?
    >
    > If someone can point to a definitive reference for this, I
    > will name my next child after you.


    It seems to me that it would include everything unless it is
    specifically excluded. My experience is that you get as
    specific as you can on contracts such as this to avoid any
    questions at all.

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    Bruce Raskin, Jun 1, 2005
    #5
  6. John

    Cory Guest

    "John" <> wrote:

    > I know a definitive answer is probably too much to ask for,
    > but I can hope...
    >
    > "Sales of all, or substantially all, assets" is a common
    > phrase. What assets are meant; all assets including cash
    > (how does one sell cash?), all assets excluding cash (why is
    > cash excluded?), or operating assets? What percentage of
    > assets is "substantially all", 51%, 99%? Or is it all vague
    > and designed to elicit litigation?
    >
    > If someone can point to a definitive reference for this, I
    > will name my next child after you.


    Cash is excluded because who actually buys cash?

    Substantially all is 90%.

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    Cory, Jun 1, 2005
    #6
  7. Cory <> wrote:

    > Cash is excluded because who actually buys cash?


    Not all that long ago, there were any number of leveraged
    buyouts where the cash accumulated by the target (company
    being acquired) was a large part of the incentive; some
    companies paid out large extraordinary dividends in order to
    make themselves less attractive to potential acquirers.

    Seth

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    Seth Breidbart, Jun 2, 2005
    #7
  8. Cory wrote:
    > "John" <> wrote:


    >> I know a definitive answer is probably too much to ask for,
    >> but I can hope...
    >>
    >> "Sales of all, or substantially all, assets" is a common
    >> phrase. What assets are meant; all assets including cash
    >> (how does one sell cash?), all assets excluding cash (why is
    >> cash excluded?), or operating assets? What percentage of
    >> assets is "substantially all", 51%, 99%? Or is it all vague
    >> and designed to elicit litigation?
    >>
    >> If someone can point to a definitive reference for this, I
    >> will name my next child after you.


    > Cash is excluded because who actually buys cash?
    >
    > Substantially all is 90%.


    I don't believe you can put a definitive percentage to this.
    Such determinations are always a "facts and circumstances"
    issue, thus making them unique to each case. I would say
    than "substantially all" assets would be everything that can
    readily be sold or otherwise disposed of without actually
    trashing it. Any remaining assets should be of
    insignificant importance to either the financial condition
    of the entity or the operations of the business.

    Lanny K. Williams, CPA
    Nawarat, Williams & Co., Ltd.
    Income Tax Services for Expatriate Americans

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    Lanny Williams, CPA, Jun 6, 2005
    #8
  9. "Lanny Williams, CPA" <> wrote:
    > Cory wrote:
    >> "John" <> wrote:


    >>> "Sales of all, or substantially all, assets" is a common
    >>> phrase. What assets are meant;


    >> Cash is excluded because who actually buys cash?
    >> Substantially all is 90%.


    > I don't believe you can put a definitive percentage to this.
    > Such determinations are always a "facts and circumstances"
    > issue, thus making them unique to each case. I would say
    > than "substantially all" assets would be everything that can
    > readily be sold or otherwise disposed of without actually
    > trashing it.


    I think it depends on the context. When I've seen the
    phrase it generally refers to an ongoing business. To sell
    substantially all the assets of the business means to sell
    the business as a going concern and all the assets that are
    necessary for the business to keep functioning. A specific
    percentage would not fit the bill in this kind of situation.

    Stu

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    Stuart A. Bronstein, Jun 7, 2005
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