This practice note discusses the tax treatment of taxable transactions and issues related to each structure. The most important initial tax consideration in any potential M&A deal is arguably the determination of whether or not the transaction should be taxable or tax-free to the seller. As discussed in Tax Benefit Maximization in Mergers and Acquisitions—Tax-Free or Taxable?, there are compelling reasons why a seller would prefer a taxable transaction. The seller may prefer a taxable deal because it needs cash. The types of consideration that can be used in tax-free transactions are limited and usually consist of equity interests, either in the buyer, the target, or in a new acquisition vehicle. If the seller needs cash to use for some other purpose in a relatively short amount of time, or if it does not wish to take the risk inherent in investing in the buyer's equity or retaining some interest in the target, then it will likely prefer a taxable structure. The seller may also prefer ...