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When purchasing a business and its assets, which includes it's losses you must be very diligent with conducting a thorough examination of the companies books and records. Legally you must do your due diligence and obtain a correct accounting of the actual profits and losses. Many businesses have two sets of books, one for the tax man and the other for themselves. My advice is to have a CPA examin the books and records to see if you are buying a profitable business.
Do not sign a purchase agreement until a tax professional looks at the books, receipts, records and other financial transactions.