When looking at a private sale, the book basis versus the tax basis is a crucial part of a transaction. The general rule is that if shares are received in consideration for sale, then the gain is not taxable. It's only taxable when the shares are actually sold. Dependent on the jurisdiction. As shareholders decide when they're going to sell their shares, they may sell their shares next year, five years, 10 years time, they may spread those sailor shares over a number of years. It's up to them. However, if the disposal is taxable, and usually when a company is sold for cash proceeds, it'll be taxable. Then capital gains tax will be charged on the gain. Now, here's the crucial bit. It's the gain above the tax basis of the company acquired, not the book value of the company acquired. So how do we work out that tax basis? Well, the tax basis is the value in the seller's tax accounts. It's what the tax authorities value the company's equity at. Now, this is often not available pre due diligence. The financial statements provide the book basis. They do not provide the tax basis. So you need inside information. You need the seller's management to open up their books and help you with those figures. Now, this tax basis, this tax author's value of equity can be quite different to the financial statements book basis. The tax basis might be lower and might give you a higher gain, a higher capital gain. Let's imagine that the tax basis gave you a capital gain of 150, whereas the book basis gave you a gain of 100. That is a permanent difference. They will never reconcile. So if I've got the choice of whether to take the book basis gain or the tax basis gain, I will always have to take the tax basis gain. This means that the tax expense in the seller's income statement will always reflect the gain on the tax basis. Now because of that, this will result in a different effective tax rate due to that permanent difference between the accounting, the book basis, and the tax rules, the tax basis. This is quite a complex part of any transaction. Therefore, we would always recommend you obtain specialist advice.