Section 1060 Purchase Price Allocation

The buyers and sellers of a group of assets that make up a business use form 8594 when goodwill or going concern value attaches. This section prescribes rules relating to the requirements of section 1060 which in the case of an applicable asset acquisition requires the transferor the seller and the transferee the purchaser each to allocate the consideration paid or received in the transaction among the assets transferred. The consideration received for such assets shall be allocated among such assets acquired in such acquisition in the same manner as amounts are allocated to assets under section 338 b 5.

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Selling taxpayers sought to disregard allocations made to covenants not to compete and purchasing taxpayers sought to allocate additional amounts to such covenants and away from goodwill.

Section 1060 purchase price allocation. 26 cfr 1 1060 1 special allocation rules for certain asset acquisitions. Section 1060 has generally been credited with providing tax certainty for the purchaser and seller where the purchaser and seller agree on an allocation of the purchase price and report the transaction on a consistent basis. Special allocation rules for certain asset acquisitions.

The amendments made by this section enacting this section and renumbering former section 1060 as 1061 shall apply to any acquisition of assets after may 6 1986 unless such acquisition is pursuant to a binding contract which was in effect on may 6 1986 and at all times thereafter. Information about form 8594 asset acquisition statement under section 1060 including recent updates related forms and instructions on how to file. 1 1060 1 special allocation rules for certain asset acquisitions.

Prior to the enactment of section 1060 as part of the 1986 act taxpayers and the government had frequently skirmished over purchase price allocations.