Owen Corporation has purchased a manufacturing business from Henry Corporation. The acquisition is an asset purchase for a total of $6,000,000. The fair market value of the asset classes are as noted in the table I below. Owen Corporation is considering offering lowering their offer by $1,000,000. Pursuant to section 1060 what is the allocation of of the total purchase price to the individual class of assets based on the original offer and the reduced offer?

Qwen Corporation Section 1060 Case Study Suggested Solution Problem 1 Owen Corporation has purchased a manufacturing business from Henry Corporation. The acquisition is an asset purchase for a total of $6,000,000. The fair market value of the asset classes are as noted in the table I below. Owen Corporation is considering offering lowering their offer by $1,000,000. Pursuant to section 1060 what is the allocation of of the total purchase price to the individual class of assets based on the original offer and the reduced offer? Assets Cash Actively traded stock Accounts receivable Inventory Machine/Equipment Building Land Patent Goodwill Class I II III IV V V V VI VII FMV $400,000 $600,000 $1,200,000 $600,000 $800,000 $1,200,000 $800,000 $200,000 (?) Total Assets Cash Actively traded stock Accounts receivable Inventory Machine/Equipment Building Land Patent Goodwill Total $5,800,000 Class I II III IV V V V VI VII FMV $400,000 $600,000 $1,200,000 $600,000 $800,000 $1,200,000 $800,000 $200,000 (?) $5,800,000 Allocation ?? ?? ?? ?? ?? ?? ?? ?? ?? $6,000,000 Allocation ?? ?? ?? ?? ?? ?? ?? ?? ?? $5,000,000