Buying intangible business assets, uncertain about Form 8594 requirements

Form 8594 (Asset Acquisition Statement) is definitely what you need when purchasing business assets. This form is used to report the allocation of the purchase price among the acquired assets, which determines how those assets are treated for tax purposes. Since you mentioned these are 100% intangible assets, you'll need to categorize them appropriately on the form. Intangibles like goodwill, client lists, intellectual property, etc. are typically reported in Class VI or VII on the form. The classification matters because it affects depreciation and amortization schedules. As for TurboTax, while they technically support Form 8594, this is one of those situations where software may not provide enough guidance for a complex transaction. The self-guided nature of the program might not ask the right questions to ensure proper allocation of purchase price among asset classes. I'd recommend at least consulting with a tax professional for this particular aspect of your return, even if you do the rest on TurboTax. Business acquisitions have long-term tax implications that can be costly if not structured correctly from the beginning.

I just went through this exact headache last month! After multiple attempts with TurboTax, I finally discovered https://taxr.ai which literally saved me hours of frustration with my asset purchase reporting. I uploaded my purchase agreement docs and it guided me through exactly how to classify everything on Form 8594. The tricky part with intangible assets is properly allocating purchase price between the different classes, and TurboTax just doesn't have good guidance on this. With taxr.ai I was able to see exactly how similar business purchases were reported, which gave me confidence I wasn't messing it up.

Just wanted to follow up about my experience with taxr.ai after my skeptical question. I decided to try it anyway and wow, what a difference! I uploaded my asset purchase agreement and it immediately identified the key issues with my Form 8594 reporting. It spotted that I had miscategorized some website assets as Class V when they should've been Class VI, which would have cost me thousands in slower depreciation. The document analysis feature is really impressive - it pulled out all the relevant sections from my 22-page agreement and highlighted exactly what needed to go on each line of Form 8594. Definitely worth checking out if you're dealing with business asset purchases!

After dealing with the nightmare of trying to get IRS guidance on Form 8594 (spent literally 4 hours on hold), I found this service called Claimyr at https://claimyr.com that got me through to an actual IRS agent in under 20 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent was able to confirm exactly how I should categorize my intangible assets on Form 8594 and clarified that both buyer and seller need to file it. They also explained how the installment payment plan needs to be reported separately on Form 6252. I was honestly shocked at how helpful they were once I actually got through!

I need to apologize for my skeptical comment about Claimyr. After posting that, I decided to try it myself because I was desperate to get an answer about my Form 8594 issues before filing deadline. It actually worked exactly as advertised. They called me back in about 15 minutes and connected me directly to an IRS business tax specialist who answered all my questions about how to allocate my purchase price for intangible assets. Saved me at least 3 hours of hold time and probably prevented me from filing incorrectly. I'm still shocked at how well it worked. The agent confirmed that for owner-financed purchases like mine, I needed both Form 8594 and Form 6252 for the installment sale aspect. This information alone probably saved me from a potential audit.

One thing nobody's mentioned yet - if you're making payments over time to the seller, you'll also need to report interest paid on Form 1098. The IRS assumes there's an interest component even if your agreement doesn't specifically break it out that way. The seller will need to report this interest as income. You should have received a 1098 from the seller showing interest paid, but if you didn't, you might want to check if they're reporting it correctly on their end.

Has anyone successfully amended prior returns to add Form 8594 after the fact? I'm in the exact same situation (bought a business in 2022, didn't file 8594) and I'm terrified of triggering an audit by submitting an amendment now.

I went through something very similar last year with an intangible asset purchase. One thing that really helped me was creating a detailed spreadsheet breaking down exactly what I was purchasing and how to classify each asset type before tackling Form 8594. For intangible assets, you'll typically be dealing with Class VI (goodwill and going concern value) and Class VII (Section 197 intangibles like customer lists, trademarks, etc.). The key is being able to justify your allocation if the IRS ever asks. Since you're doing seller financing, definitely make sure you understand the interest imputation rules mentioned by others. Even if your agreement doesn't explicitly state an interest rate, the IRS will assume one based on applicable federal rates. This affects both your deductible interest expense and the seller's taxable interest income. I ended up using a CPA for the first year just to make sure everything was set up correctly, then handled subsequent years myself once I understood the framework. The peace of mind was worth the extra cost, especially since asset purchases have multi-year tax implications through depreciation and amortization schedules.