CBB Legal & Regulatory Compliance 3

Question 1

Under IRS rules, when a business is sold as an asset sale, which form must buyer and seller file to report the allocation of purchase price among asset classes?

Accepted Answer

Form 8594

Answer

IRS Form 8594 (Asset Acquisition Statement) must be filed by both buyer and seller showing the agreed purchase price allocation.

Question 2

Which type of business sale structure generally allows the buyer to receive a stepped-up tax basis in the acquired assets?

Accepted Answer

Asset purchase

Answer

An asset purchase allows the buyer to allocate the purchase price to individual assets, receiving a stepped-up basis for depreciation purposes.

Question 3

What is the primary legal concern a broker must address when a business being sold holds a liquor license?

Accepted Answer

Liquor licenses are state-regulated and typically require separate approval for transfer

Answer

Liquor licenses are granted by state agencies and almost always require a separate application and approval for any ownership transfer.

Question 4

Environmental due diligence in a business sale often involves a Phase I Environmental Site Assessment. What does a Phase I assessment primarily involve?

Accepted Answer

A records review and site reconnaissance without physical sampling

Answer

A Phase I ESA is a non-invasive review of historical records, regulatory databases, and a site walkthrough to identify potential contamination concerns.

Question 5

When representing a seller, a business broker's fiduciary duty includes all of the following EXCEPT:

Accepted Answer

Negotiating the lowest possible price for the buyer

Answer

Negotiating the lowest price would benefit the buyer, not the seller — this is opposite to a seller's broker's fiduciary duty.

(CBB) Certified Business Brokers Practice Test

(CBB) Certified Business Brokers Practice Test

CBB Legal & Regulatory Compliance 3