Maryland Asset Allocation Tax Impact Calculator

Buyer-side analysis of federal depreciation benefits & Maryland personal property tax obligations — all 36 asset categories

For Discussion Purposes Only — Not Legal or Tax Advice

This calculator is a preliminary analytical tool for general educational and discussion purposes only. All results are estimates based on the inputs provided and simplified modeling assumptions. This tool does not constitute legal, tax, accounting, or investment advice. Tax laws change frequently; consult a qualified CPA, tax attorney, or financial advisor before making any decisions. All Maryland and federal tax figures should be independently verified for your specific transaction.

This calculator does not include real estate transactional taxes that may apply to any real property component of the deal — such as Maryland state recordation tax, state transfer tax (0.5%), county/local transfer taxes, or mortgage recordation taxes. These closing costs vary by county and should be evaluated separately with qualified real estate counsel.

Deal Parameters

Set purchase price, analysis period, and applicable tax rates — click i for details on any field
Total Purchase Price ($)
Total asset deal consideration
Analysis Period (Years)
Depreciation horizon
Federal Tax Rate (%)
Federal income tax rate (corp: 21%; pass-through: up to 37%)
MD Property Tax Rate (%)
County rate on tangible personal property (avg 2.0–3.5%)
Seller Ordinary Rate (%)
Applied to §1245 recapture & inventory gain
Seller LTCG Rate (%)
Fed LTCG 20% + 3.8% NIIT (high-income seller)
Seller MD Rate (%)
MD state+local rate on seller gain (est. 8.25–9.45%)
Optional
Depreciation Method
Applies only to bonus-eligible assets

Asset Allocation — All 36 Categories

Enter purchase price allocated to each asset type (IRS §1060 / Form 8594) — click i on any asset for details
Allocated: $0 of $5,000,000 $5,000,000 remaining
IRS Form 8594 — Both buyer and seller must file consistent allocations using the residual method under §1060. Allocations drive depreciation deductions, seller gain recognition, and §1245/§1250 recapture. Consult your tax advisor before finalizing.

Seller Tax at Closing (One-Time)

Estimated income tax owed by seller upon sale — based on your allocation
How this works: Tangible personal property (§1245 assets) triggers ordinary income tax on gain equal to prior depreciation recapture. §197 intangibles and land trigger long-term capital gains tax. Financial assets transferred at face value generate no gain. Maryland state income tax applies additionally. These taxes are borne by the seller, but understanding them helps buyers in negotiation — a higher allocation to ordinary income assets increases seller’s total tax burden.
AssetAllocationTax TypeFed Rate+MD RateEst. Seller Tax

Maryland Bulk Sales Tax — One-Time Buyer Cost

6% MD sales & use tax on tangible personal property transferred in a business sale — borne by the buyer
Important: Maryland imposes a 6% bulk sales tax on most tangible personal property in an asset deal. This is a one-time closing cost paid by the buyer—separate from both federal income tax and the annual MD personal property tax. Certain assets are exempt (manufacturing equipment, titled vehicles, resale inventory, intangibles). A Going Concern exemption may apply if the buyer continues the same type of business with substantially all assets, but must be evaluated deal-by-deal.
Going Concern Exemption?
Consult counsel before claiming exemption
Asset Allocation Status Rate Est. Bulk Tax
Buyer Analysis Results
Federal depreciation tax savings and Maryland ongoing personal property tax obligations
Total Depreciation Tax Shield
$0
Over analysis period
Total MD Property Tax (Buyer)
$0
On tangible personal property
Net Tax Benefit (Buyer)
$0
Dep. savings minus MD PT & bulk sales tax
MD Bulk Sales Tax (Buyer)
$0
One-time closing cost

Annual Tax Schedule

Year-by-year depreciation deductions, tax savings, and MD personal property tax
YearDep. DeductionTax ShieldMD PT (Tangible)MD Bulk Sales Tax*Net Cash BenefitCumulative Net

Annual Tax Shield vs. MD Property Tax

Cumulative Net Benefit Over Time

Allocation by Category

Distribution of purchase price across asset categories

IRS §1060 — Residual Method

In asset deals, purchase price must be allocated using the residual method across Classes I–VII in priority order. Both buyer and seller must file Form 8594 with consistent allocations.

→ IRS Pub. 946

MACRS Depreciation

The Modified Accelerated Cost Recovery System allows accelerated deductions using 200% or 150% declining balance. GDS recovery periods range from 3–39 years for most assets.

→ IRS Pub. 946

100% Bonus Depreciation

Under TCJA and extension (Jan 2025), eligible new and used property can be fully expensed in Year 1. Applies to 3–15-year MACRS property. NOT available for §197 intangibles or land.

→ IRS Bonus Dep.

§197 Intangibles (15-yr Amortization)

Goodwill, going concern, customer lists, covenants not to compete, trademarks, and other business intangibles acquired in a business purchase must be amortized straight-line over 15 years. All §197 assets in one transaction are treated as a group.

→ IRS Intangibles

§1245 Recapture

When depreciable personal property is sold, prior depreciation claimed is recaptured and taxed as ordinary income. This is why sellers often resist allocating value to depreciable tangible assets.

→ IRS Pub. 544

MD SDAT Personal Property Tax

Maryland imposes an annual personal property tax on tangible business assets (equipment, furniture, vehicles, computers, inventory). Rate varies by county (typically 2.0–3.5%). Real property and intangibles are NOT subject to this tax.

→ SDAT Website

Maryland 2025 Income Tax

New brackets: 6.25% on income >$500K (single); 6.5% on >$1M. New 2% surtax on capital gains for AGI >$350K. Corporate rate remains 8.25%. Combined MD+local can reach 9.45%.

→ MD Comptroller

MD Bulk Sales Tax — 6%

Maryland imposes a 6% sales & use tax on tangible personal property transferred outside the ordinary course of business (asset deals). Taxable: furniture, computers, software, office equipment. Exempt: manufacturing equipment (used directly in production), titled vehicles (MVA excise applies), resale inventory, intangibles, real property. A going concern exemption may apply.

→ MD Comptroller: Bulk Sales Tax

Cost Segregation Studies

Engineering-based studies reclassify components of real property into shorter-lived personal property for faster depreciation. Valuable for commercial buildings where 20–40% of cost may be reclassifiable.

→ IRS Cost Seg. ATG