ACCT 540 Form 8594 assignment

Use Form 8594. Read the instructions to the form to address any uncertainty.

You may also read Section 1060. The purpose of this section is to prescribe an approach to allocate a lump sum purchase or sales price among various assets purchased or sold. Form 8594 is a reporting device that is filed by both the buyer and the seller. The way the allocation is done is spelled out in the regulations to Section 338 (the two sections share use of the residual method of allocation).

FACTS

Target Corporations assets are acquired by Acquiring Corporation in exchange for $13,200,000 of cash to be paid to Target Corporation. The purchase agreement is dated March 13, 2022.

Target Corporations EIN is 23-372698674. Target Corporations address is 3245 Industrial Blvd., McKinney, TX 75070. YOU REPRESENT TARGET (THE SELLER) AND WILL REPORT THE FORM ON BEHALF OF THE SELLER.

Acquiring Corporations EIN is 23-900653890. Acquiring Corporations address is 9200 Bretton Lakes Rd., Nashville, TN, 37209.

The contract lists the following assets and values assigned by the parties. The parties have agreed that they will follow the purchase price allocation as stated in the contract.

Target has no liabilities to be assumed by Acquiring.

AssetAssigned FMVCash230,000Inventory1,600,000Accounts Receivable430,000Workforce in Place1,320,000Equipment3,200,000Furnishings310,000Land320,000Building770,000

In addition to the $13,200,000 paid to Target Corporation, Acquiring has also entered into a covenant not to compete with Jack Sparrow, the President of Target. Sparrow will be paid $500,000 for an agreement to not compete with Acquiring for a period of 36 months after the acquisition.