Deal expenses as tax deductions

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April 26, 2026

by a searcher from Indiana University at Bloomington in Chicago, IL, USA

Appreciate any guidance/best practices on maximizing treatment of (particularly pre-closing) deal expenses as tax deductible. I'm a solo searcher. I read somewhere that it is best to ask legal, QoE, etc. to invoice post-closing, I believe to address "“active trade or business” issues. Any other ways to solve for this - e.g., would it help if I formed my acquisition entity? Opened a bank account? Also open to any accountant recommendations. Thanks!
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Reply by a professional
from University of New Brunswick in Toronto, ON, Canada
Forming a NewCo as your acquisition entity (likely LLC) *before* signing your LOI and running costs through it likely helps. It is best to consult a CPA who has experience with search funds as this has many moving parts to be implemented in the most tax efficient manner.
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