• Buying a Business that Has Deferred Income
  • August 18, 2010 | Author: Jasper L. Cummings
  • Law Firm: Alston & Bird LLP - Raleigh Office
  • Although deferral of reporting of income that has been received is uncommon, the option is allowed to many businesses under rules such as section 455 for prepaid subscription income. When the assets of such a business are sold in a taxable transaction, the buyer will often have to assume the contractual obligation for which the seller has already paid. (Assume the seller does not transfer to the buyer any fund or deposit representing the prepaid income.)