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).

YOU MUST COMPLETE THE ACTUAL FORM 8594

FACTS

Target Corporations assets are acquired by Acquiring Corporation in exchange for $3,200,000 of cash to be paid to Target Corporation. The purchase agreement is dated November 24, 2021.

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.

Asset	Assigned FMV
Cash	50,000
Inventory	160,000
Accounts Receivable	75,000
Workforce in Place	100,000
Equipment	150,000
Furnishings	40,000
Land	20,000
Building	200,000

In addition to the $3,200,000 paid to Target Corporation, Acquiring has also agreed to lease a warehouse facility owned by Jack Sparrow, the President of Target. Sparrow will be paid $40,000 per year for the lease for a period of 5 years.