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Purchasing stock or assets

Question
When I purchase a business, should I buy the stock in the corporation or the assets? 
Answer
In most cases, it would be better to form a separate entity to purchase only the assets of the corporation. There are two primary reasons:

1. You may get better tax treatment, since your "tax basis" in the assets will be the amount you paid for them, rather than the amount on the books of the corporation.

2. Any liabilities, known or unknown, against the selling entity will stop there, and not accrue to the new owner of the assets.

Be sure to consult with your tax and legal advisors about your particular circumstances before proceeding. 
 
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