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802.4 |
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Staff: |
Michael Verne |
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Response / Comments: |
10/02/2012 - You have to value the intangible assets as part of an ongoing business. We have had this question come up quite a bit lately. I think some advice has been misinterpreted. We have said that you can allocate a portion of the intangibles to exempt assets (if appropriate), which would make the intangibles exempt as well. However, you must take into account any intangible assets associated with the non-exempt assets. K Walsh concurs. |
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From: |
(Redacted) |
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Sent: |
Monday, October 01, 2012 3:14 PM |
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To: |
Verne, B. Michael |
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Subject: |
802.4 Question |
Hi Mike, I hope you got to enjoy the beautiful weather this weekend. This is a 802.4 question.
Facts
1. A will acquire all of the outstanding equity of B for approximately $300 million. B is an IT company.
2. B has approximate $30 million of total assets.
3. B's assets include approximately $16 million in cash and cash equivalents and approximately $1 million in prepared expenses.
4. B has approximately $4 million in receivables and $9 million in other assets. So a total of approximately $13 million in non-exempt assets.
Question
1. To determine the fair market value of the non-exempt assets must A value the assets as part of an ongoing business enterprise or determine what a third-party purchaser would pay in cash today to acquire only the non-exempt assets (not the exempt assets or B's employee's, customer relationships, etc.)?
Many thanks as always for your help.