What is the Asset Acquisition Statement Under Section 1060?

If you buy or sell a group of assets that make up a trade or business, you may need to file Form 8594, Asset Acquisition Statement Under Section 1060.

This form reports how the total purchase price was divided among the assets included in the sale. Both the buyer and the seller generally must file Form 8594 when goodwill or going concern value is part of the transaction and the buyer's tax basis in the assets is determined solely by the amount paid.

When is Form 8594 required?

Both the buyer and seller must attach Form 8594 to their tax return for the year of the transfer if:

• Goodwill or going concern value attaches, or could attach, to the transferred assets
• The purchaser's basis in the assets is determined only by the purchase price paid for those assets

What is going concern value?

Going concern value is the additional value a business has because it is already operating. It reflects the ability of the business to continue generating income after ownership changes.

What is goodwill?

Goodwill is the value of a business that comes from factors such as its reputation, brand recognition, customer relationships, or expected repeat business. In many business sales, goodwill represents a significant portion of the purchase price.

When is Form 8594 not required?

You generally do not need to file Form 8594 if:

• The transferred assets do not include goodwill or going concern value
• The transaction qualifies as a like-kind exchange (unless certain assets are transferred outside the exchange)
• The sale involves only a partnership interest, unless federal tax law treats the transaction as a purchase of partnership assets

What does Form 8594 report?

Form 8594 is used to allocate the total consideration paid in the transaction among seven IRS asset classes based on fair market value.

This allocation is important because:

• Sellers use it to determine any taxable gain or loss on the sale
• Buyers use it to establish the tax basis of acquired assets for depreciation, amortization, and other tax purposes

The allocation reported by the buyer and seller should generally be consistent.

What are the parts of Form 8594?

Part I: General Information

Part I identifies:

• The other party involved in the transaction
• The date of sale
• The total consideration paid or received

Part II: Original Statement of Assets Transferred

Part II reports:

• The allocation of the purchase price among the seven asset classes
• Information about whether the allocation is being reported consistently
• Certain required statements related to the transaction

Part III: Supplemental Statement

Part III is used to amend a previously filed Form 8594 when:

• The buyer's cost of the assets changes, or
• The seller's amount realized changes after the original filing

How do I enter Form 8594 in the program?

To access Form 8594 in the software:

1. Go to Federal
2. Select Miscellaneous Forms
3. Choose Other Miscellaneous Forms
4. Select Asset Acquisition Statement Under Section 1060

Additional information

• Form 8594, Asset Acquisition Statement Under Section 1060
• IRS Instructions for Form 8594

Before you file

The buyer and seller should agree on the allocation of the purchase price whenever possible. Reporting different allocations can increase the likelihood of IRS questions and may require additional documentation to support the amounts reported.