Series 79: 11.2.3.1. Forms Of Consideration

11.2.3.1. Forms of Consideration

The form of consideration, or just consideration, is the type of payment the buyer offers—typically either cash, the buyer’s own securities, or a combination of the two. The form of consideration has a significant impact on tax issues. For a transaction to be considered tax-free, the consideration must consist largely or entirely of stock. Cash payments are taxable. Even in a tax-free reorganization (see below), whatever portion of the consideration is cash will be taxable. The seller’s tax advisors will be ab