Are you looking to acquire a business or sell your own? Then you need to know about form 8594 or the Asset Acquisition Statement. It’s a document used by the Internal Revenue Service (IRS) to report the purchase price allocation in a business sale.
With that in mind, let this post guide you through how to create form 8594, learn tips on how to avoid common mistakes, and discover the best practices we know for accomplishing this form.
How to Create Form 8594: Step-by-Step Guide
1. Determine the purchase price allocation
The purchase price allocation is the total amount paid for the business and allocated to the assets purchased. The distribution of the purchase price is critical information because it affects the buyer and seller’s tax liability.
To that end, working with your accountant or tax professional to determine the appropriate allocation would be best.
2. Identify the assets for acquisition
You need to identify the assets set for acquisition in the transaction. These could include tangible assets like inventory, equipment, and real estate. They could also involve intangible assets like patents, trademarks, and goodwill. Make sure to include all purchases in the transaction.
3. Complete Form 8594
Once you have determined the purchase price allocation and identified the assets in question, you can complete form 8594. The form consists of four parts, which we’ll cover in the next section.
Download the Form 8594 Template
Form 8594 – Asset Acquisition Statement Under Section 1060
Standard Elements of Form 8594
Part 1: Asset acquisition statement
This part of the form reports the sale of assets in a business transaction. You will need to provide information about the buyer and seller, the date of the deal, and the total purchase price.
Part 2: Allocation of Purchase Price
This portion of the document allocates the purchase price to the assets for the acquisition. You will need to provide the fair market value of each asset, the total purchase price given to each asset, and the method used to determine the fair market value.
Part 3: Elections
You use this section to make certain tax elections. You may need to consult with your tax professional to determine which elections to make. A qualified accountant can help you simplify the form and decide what information to put in each component.
Part 4: Seller information
This form component aims to provide information about the seller, including their taxpayer identification number (TIN). You must provide detailed and accurate information to get a successful outcome.
Using Fill For Drafting IRS Form 8594
A business acquisition can be complex and time-consuming. Fortunately, Fill is here to simplify your tax forms. Fill is an eSignature app that lets you easily create, edit, and sign documents online. With Fill, you can complete Form 8594 quickly and accurately with a customizable template. Plus, you can sign the document electronically and save it as a PDF.
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