8594 Asset Acquisition Statement OMB No. 1545-1021 Form

(Rev. July 1998) Under Section 1060

Department of the Treasury

Internal Revenue Service

Attachment © Attach to your Federal income tax return. Sequence No. 61

Name as shown on return Identification number as shown on return

Check the box that identifies you: Buyer Seller

General Information—To be completed by all filers.

1 Name of other party to the transaction Other party’s identification number

Address (number, street, and room or suite no.)

City or town, state, and ZIP code

2 Date of sale 3 Total sales price

Assets Transferred—To be completed by all filers of an original statement.

4 Assets Aggregate Fair Market Value (Actual Amount for Class I) Allocation of Sales Price

Class I $ $

Class II $ $

Class III $ $

Classes IV and V $

Total $

Did the buyer and seller provide for an allocation of the sales price in the sales contract or in another

written document signed by both parties?

5

Yes No

If “Yes,” are the aggregate fair market values listed for each of asset Classes I, II, III, IV and V the amounts

agreed upon in your sales contract or in a separate written document? Yes No

In connection with the purchase of the group of assets, did the buyer also purchase a license or a covenant not

to compete, or enter into a lease agreement, employment contract, management contract, or similar arrangement

with the seller (or managers, directors, owners, or employees of the seller)?

6

Yes No

If “Yes,” specify (a) the type of agreement, and (b) the maximum amount of consideration (not including

interest) paid or to be paid under the agreement. See the instructions for line 6.

For Paperwork Reduction Act Notice, see instructions. Form 8594 (Rev. 7-98)

Part I

Part II

Cat. No. 63768Z

$

$
Form 8594 (Rev. 7-98) Page 2

Supplemental Statement—To be completed only if amending an original statement or previously filed

supplemental statement because of an increase or decrease in consideration.

7 Assets Allocation of Sales Price as Previously Reported Increase or (Decrease) Redetermined Allocation of Sales Price

Class I $ $ $

Class II $ $ $

Class III $ $ $

Total $ $

8 Reason(s) for increase or decrease. Attach additional sheets if more space is needed.

9 Tax year and tax return form number with which the original Form 8594 and any supplemental statements were filed.

Part III

Classes IV and V $ $ $
Form 8594 (Rev. 7-98) Page 3

“Class III assets” are all tangible and

intangible assets that are not Class I, II, IV, or

V assets. Amortizable section 197 intangibles

are Class IV assets. Examples of Class III

assets are furniture and fixtures, land,

buildings, equipment, and accounts

receivable.

When To File

General Instructions

Section references are to the Internal

Revenue Code unless otherwise noted.

“Class IV assets” are all amortizable

section 197 intangibles, except for goodwill

and going concern value. Amortizable section

197 intangibles include:

Penalty

Definitions

“Applicable asset acquisition” means a

transfer of a group of assets that makes up a

trade or business in which the buyer’s basis

in such assets is determined wholly by the

amount paid for the assets. An applicable

asset acquisition includes both a direct and

indirect transfer of a group of assets, such as

a sale of a business.

A group of assets makes up a “trade or

business” if goodwill or going concern value

could under any circumstances attach to

such assets. A group of assets could qualify

as a trade or business whether or not they

qualify as an active trade or business under

section 355 (relating to controlled

corporations). Factors to consider in making

this determination include (a) any excess of

the total paid for the assets over the

aggregate book value of the assets (other

than goodwill or going concern value) as

shown in the buyer’s financial accounting

books and records, or (b) a license, a lease

agreement, a covenant not to compete, a

management contract, an employment

contract, or other similar agreements between

buyer and seller (or managers, directors,

owners, or employees of the seller).

Purpose of Form

Who Must File

Exceptions. You are not required to file Form

8594 if any of the following apply:

The buyer’s “consideration” is the cost of

the assets. The seller’s “consideration” is the

amount realized.

“Fair market value” is the gross fair market

value unreduced by mortgages, liens,

pledges, or other liabilities. However, for

determining the seller’s gain or loss,

generally, the fair market value of any

property is not less than any nonrecourse

debt to which the property is subject.

“Class I assets” are cash, demand

deposits, and similar accounts in banks,

savings and loan associations, and other

depository institutions, and other similar items

that may be designated in the Internal

Revenue Bulletin.

“Class II assets” are certificates of deposit,

U.S. Government securities,

readily marketable stock or securities, foreign

currency, and other items that may be

designated in the Internal Revenue Bulletin.

New temporary regulations under sections

1060 and 338 clarified the rules for allocating

assets acquired after February 13, 1997.

Under the new rules, all section 197

intangibles (other than goodwill and going

concern value) are included in Class IV.

Goodwill and going concern value are

assigned to a new class, Class V. See “Class

IV” and “Class V” under Definitions below.

2. A group of assets that makes up a trade

or business is exchanged for like-kind

property in a transaction to which section

1031 applies. However, if section 1031 does

not apply to all the assets transferred, Form

8594 is required for the part of the group of

assets to which section 1031 does not apply.

For information about such a transaction, see

Regulations section 1.1060-1T(b)(4).

3. A partnership interest is transferred. See

Regulations section 1.755-2T for special

reporting requirements.

A Change To Note

Both the seller and buyer of a group of assets

that makes up a trade or business must use

Form 8594 to report such a sale if goodwill or

going concern value attaches, or could

attach, to such assets and if the buyer’s

basis in the assets is determined only by the

amount paid for the assets (“applicable asset

acquisition,” defined below). Form 8594 must

also be filed if the buyer or seller is amending

an original or a previously filed supplemental

Form 8594 because of an increase or

decrease in the buyer’s cost of the assets or

the amount realized by the seller.

Subject to the exceptions noted below, both

the buyer and the seller of the assets must

prepare and attach Form 8594 to their

Federal income tax returns (Forms 1040,

1041, 1065, 1120, 1120S, etc.).

Generally, attach Form 8594 to your Federal

income tax return for the year in which the

sale date occurred. If the amount allocated to

any asset is increased or decreased after

Form 8594 is filed, the seller and/or buyer

(whoever is affected) must complete Part I

and the supplemental statement in Part III of

a new Form 8594 and attach the form to the

Federal tax return for the year in which the

increase or decrease is taken into account.

If you fail to file a correct Form 8594 by the

due date of your return and you cannot show

reasonable cause, you may be subject to a

penalty. See sections 6721 through 6724.

● Workforce in place,

● Business books and records, operating

systems, or any other information base,

● Any patent, copyright, formula, process,

design, pattern, know-how, format, or similar

item,

● Any customer-based intangible,

● Any supplier-based intangible,

● Any license, permit, or other right granted

by a governmental unit,

● Any covenant not to compete entered into

in connection with the acquisition of an

interest in a trade or a business, and

● Any franchise (other than a sports

franchise), trademark, or trade name.

1. The acquisition is not an applicable

asset acquisition (defined below).

However, the term “section 197 intangible”

does not include any of the following:

● An interest in a corporation, partnership,

trust, or estate,

● Interests under certain financial contracts,

● Interests in land,

● Certain computer software,

● Certain separately acquired interests in

films, sound recordings, video tapes, books,

or other similar property,

● Certain separately acquired rights to

receive tangible property or services,

● Certain separately acquired interests in

patents or copyrights,

The following definitions apply to

applicable acquisitions after February 13,

1997. For transitional rules that apply to

acquisitions before February 14, 1997, see

Transitional Rules on page 4.

● Interests under indebtedness,

● Professional sports franchises,

● Certain transaction costs.

See section 197(e) for further information.

● Interests under leases of tangible property,

“Class V assets” are section 197

intangibles in the nature of goodwill and

going concern value.

Consideration should be allocated as

follows: (a) reduce the consideration by the

amount of Class I assets transferred,

(b) allocate the remaining consideration to

Class II assets in proportion to their fair

market values on the purchase date,

(c) allocate to Class III assets in proportion to

their fair market values on the purchase date,

(d) allocate to Class IV assets in proportion to

their fair market values on the purchase date,

and (e) allocate to Class V assets.

Allocation of Consideration

An allocation of the purchase price must be

made to determine the buyer’s basis in each

acquired asset and the seller’s gain or loss on

the transfer of each asset. Use the residual

method for the allocation of the sales price

among the amortizable section 197

intangibles and other assets transferred. See

Regulations section 1.1060-1T(d). The amount

allocated to an asset, other than a Class V

asset, cannot exceed its fair market value on

the purchase date. The amount you can

allocate to an asset also is subject to any

applicable limits under the Internal Revenue

Code or general principles of tax law. For

example, see section 1056 for the basis

limitation for player contracts transferred in

connection with the sale of a franchise.

Reallocation After an

Increase or Decrease in

Consideration

If an increase or decrease in consideration

that must be taken into account to

redetermine the seller’s amount realized on

the sale, or the buyer’s cost basis in the

assets, occurs after the purchase date, the

seller and/or buyer must allocate the increase

or decrease among the assets. If the increase

or decrease occurs in the same tax year as
Form 8594 (Rev. 7-98) Page 4

Specific Allocation

Allocation of Decrease

Line 2. Enter the date on which the sale of

the assets occurred.

Line 3. Enter the total consideration

transferred for the assets.

Line 4. For a particular class of assets, enter

the total fair market value of all the assets in

the class and the total allocation of the sales

price. For Classes IV and V, enter the total

fair market value of Class IV and Class V

combined, and the total portion of the sales

price allocated to Class IV and Class V

combined.

You cannot decrease the amount allocated

to an asset below zero. If an asset has a

basis of zero at the time the decrease is

taken into account because it has been

disposed of, depreciated, amortized, or

depleted by the buyer, the decrease in

consideration allocable to such asset must be

properly taken into account under principles

of tax law applicable when the cost of an

asset (previously reflected in basis) is reduced

after the asset has been disposed of,

depreciated, amortized, or depleted. An asset

is considered to have been disposed of to the

extent the decrease allocated to it would

reduce its basis below zero. Specific Instructions

For an original statement, complete Parts I

and II. For a Supplemental Statement,

complete Parts I and III.

Complete Part III and file a new Form 8594

for each year that an increase or decrease in

consideration occurs. Give the reason(s) for

the increase or decrease in allocation. Also,

enter the tax year(s) and form number with

which the original and any supplemental

statements were filed. For example, enter

“1997 Form 1040.”

Enter your name and taxpayer identification

number (TIN) at the top of the form. Then

check the box for buyer or seller.

Patents, Copyrights, and

Similar Property

Line 1. Enter the name, address, and TIN of

the other party to the transaction (buyer or

seller). You are required to enter the TIN of

the other party. If the other party is an

individual or sole proprietor, enter the social

security number. If the other party is a

corporation, partnership, or other entity, enter

the employer identification number.

Allocation of Increase

Part I

Part II

Line 6. This line must be completed by the

buyer and the seller. To determine the

maximum consideration to be paid, assume

that any contingencies specified in the

agreement are met and that the consideration

paid is the highest amount possible. If you

cannot determine the maximum

consideration, state how the consideration

will be computed and the payment period.

Part III

For an increase or decrease related to a

patent, copyright, etc., see Specific

Allocation below.

Allocate an increase in consideration as

described under Allocation of

Consideration. If an asset has been disposed

of, depreciated, amortized, or depleted by the

buyer before the increase occurs, any amount

allocated to such asset by the buyer must be

properly taken into account under principles

of tax law applicable when part of the cost of

an asset (not previously reflected in its basis)

is paid after the asset has been disposed of,

depreciated, amortized, or depleted.

Allocate a decrease in consideration as

follows: (a) reduce the amount previously

allocated to Class V assets, (b) reduce the

amount previously allocated to Class IV

assets in proportion to their fair market values

on the purchase date, (c) reduce the amount

previously allocated to Class III assets in

proportion to their fair market values on the

purchase date, and (d) reduce the amount

previously allocated to Class II assets in

proportion to their fair market values on the

purchase date.

You must make a specific allocation (defined

below) if an increase or decrease in

consideration is the result of a contingency

that directly relates to income produced by a

particular intangible asset, such as a patent,

a secret process, or a copyright, and the

increase or decrease is related only to such

asset and not to other assets. If the specific

allocation rule does not apply, make an

allocation of any increase or decrease as you

would for any other assets as described

under Allocation of Increase and Allocation

of Decrease.

Limited to the fair market value of the asset,

any increase or decrease in consideration is

allocated first specifically to the patent,

copyright, or similar property to which the

increase or decrease relates, and then to the

other assets in the order described under

Allocation of Increase and Allocation of

Decrease. For purposes of applying the fair

market value limit to the patent, copyright, or

similar property, the fair market value of such

asset is redetermined when the increase or

decrease is taken into account by considering

only the reasons for the increase or decrease.

The fair market values of the other assets are

not redetermined.

the purchase date, consider the increase or

decrease to have occurred on the purchase

date. If the increase or decrease occurs after

the tax year of the purchase date, consider it

in the tax year in which it occurs.

Transitional Rules

For acquisitions before February 14, 1997,

that do not include section 197 intangibles,

you must use the prior rules (the rules in

effect before the issuance of new temporary

regulations on January 9, 1997). See

Allocation of consideration under prior

rules below.

For acquisitions before February 14, 1997,

that include section 197 intangibles, you may

consistently:

● Apply the rules and definitions contained in

these instructions and in Temporary

regulations section 1.1060-1T;

● Apply the prior rules and definitions

described below under Allocation of

consideration under prior rules; or

● Apply the prior rules and definitions, but

treat amortizable section 197 intangibles as

Class IV assets.

Allocation of consideration under prior

rules. Under the prior rules, purchase price is

allocated to the following four classes:

“Class I assets,” which include cash and

demand deposits.

“Class II assets,” which include highly

liquid assets (e.g., readily marketable

securities and certificates of deposit).

“Class III assets,” which include all

transferred assets that are not in Classes I, II,

and IV. This includes tangible and intangible

assets, whether or not depreciable,

depletable, or amortizable (e.g. furniture,

equipment, buildings, accounts receivable,

and covenants not to compete).

“Class IV assets,” which include assets in

the nature of goodwill and going concern

value.

The time needed to complete and file this

form will vary depending on individual

circumstances. The estimated average time

is:

Recordkeeping 8 hr., 51 min.

Learning about the

law or the form 1 hr., 35 min.

Preparing and sending

the form to the IRS 1 hr., 49 min.

If you have comments concerning the

accuracy of these time estimates or

suggestions for making this form simpler, we

would be happy to hear from you. You can

write to the IRS at the address listed in the

instructions for the tax return with which this

form is filed.

We ask for the information on this form to

carry out the Internal Revenue laws of the

United States. You are required to give us the

information. We need it to ensure that you are

complying with these laws and to allow us to

figure and collect the right amount of tax.

You are not required to provide the

information requested on a form that is

subject to the Paperwork Reduction Act

unless the form displays a valid OMB control

number. Books or records relating to a form

or its instructions must be retained as long as

their contents may become material in the

administration of any Internal Revenue law.

Generally, tax returns and return information

are confidential, as required by section 6103.

Paperwork Reduction Act

Notice