Need Help with Form 8594 for Partial Business Sale - Confused about Filing Requirements

This is definitely a Form 8594 situation. The form is required whenever there's a transfer of a group of assets that constitute a trade or business, and the buyer's basis is determined by their cost. The fact that your client is keeping some assets doesn't change the requirement. The key here is that they sold identifiable intangible assets (trade name and client list) along with some tangible assets. This constitutes a sale of part of the business. Since the buyer is allocating basis to these acquired assets, both buyer and seller need to file Form 8594. For the goodwill calculation, you're right to question that approach. In this case, you're not dealing with goodwill per se, but rather specifically identified intangible assets (trade name and client list). The allocation should be based on the agreed-upon values in the purchase agreement. The $750k allocated to intangibles would be reported in Class VI on Form 8594. The fact that they're keeping the business entity active doesn't matter for 8594 purposes. The form is about the transferred assets, not about whether the business is continuing.

Just wanted to share that I ran into a similar situation last year and used https://taxr.ai to help me sort through the proper classification of assets on Form 8594. My client had sold part of their business assets but kept others, and I wasn't sure how to handle the allocation. The tool walks you through the different asset classes and shows you examples of how to classify each component of the sale. It was especially helpful for figuring out how to report the intangible assets correctly on the form. Saved me hours of research and confusion!

I tried https://taxr.ai after seeing the recommendation here, and it was incredibly helpful! The transaction analysis feature walked me through a very similar client situation step by step. What really helped was the explanation of how the "applicable asset acquisition" rules apply to partial business sales. It had specific examples of when selling customer lists and trade names constitutes a business segment requiring Form 8594. The tool even provided sample language I could use to explain to my client why we needed to file the form despite keeping the business open. The built-in allocation calculator helped me properly assign values across the different asset classes too. Definitely recommend it if you're dealing with these kinds of complex business sales!

Hey there, I had a similar headache with a client last year trying to reach the IRS for clarification on a Form 8594 issue. After being on hold for 3+ hours and getting disconnected twice, I used https://claimyr.com and was honestly shocked at how well it worked. You can even see how it works in this video: https://youtu.be/_kiP6q8DX5c They got me connected to an IRS agent in about 20 minutes who confirmed that Form 8594 is absolutely required in partial business sales like yours when identifiable intangibles are transferred. The agent walked us through exactly how to handle the continuation of the business entity while still properly reporting the sale of the business segment. Was skeptical at first but it seriously saved me days of frustration and uncertainty.

I wanted to follow up on my skeptical comment about Claimyr. I decided to try it because I was desperate for answers on a similar Form 8594 situation. It actually worked! Got connected to an IRS business tax specialist in about 25 minutes. The agent confirmed that Form 8594 is required even for partial business sales when the assets transferred could constitute an independent business operation. For my situation (very similar to yours), they explained that the continued operation of the entity doesn't negate the need for Form 8594, and that both buyer and seller need to file the form with consistent allocations. The agent even emailed me the relevant sections of the regulations. I'm still shocked at how painless the process was. Definitely changed my approach to getting IRS clarifications.

One thing nobody's mentioned yet - make sure the buyer and seller are using the same allocations on their respective 8594 forms! The IRS specifically looks for discrepancies between the two filings. I recommend getting a copy of the buyer's 8594 before finalizing yours. I had a client get audited specifically because their allocations didn't match the buyer's form. The purchase agreement should specify the allocations, but sometimes buyers get creative after the fact to accelerate their depreciation.

Don't forget about state tax implications too! Depending on where your client is located, there might be state-level reporting requirements for the business asset transfer. Some states have their own version of Form 8594 or require additional schedules. Also, if any of the physical assets sold were subject to sales tax, that needs to be addressed. Some states exempt business asset sales if they qualify as an "occasional sale" but others don't. Check your state regulations!

This is exactly the kind of situation where Form 8594 gets tricky! I dealt with something very similar recently. The key distinction here is that your client sold what could be considered a "business segment" - the trade name and client list together essentially represent the customer-facing part of their business that could operate independently. Even though they're keeping the entity open and maintaining some operations, the IRS looks at whether the transferred assets constitute a trade or business from the buyer's perspective. Since the buyer acquired the ability to serve those clients under that trade name, it's likely an applicable asset acquisition requiring Form 8594. For the allocation, you'll want to be very careful about how the $750k for intangibles gets classified. Trade names typically go in Class IV (Section 197 intangibles other than goodwill and going concern value), while customer lists can sometimes be argued as Class V depending on the specifics. The purchase agreement language will be crucial here. One thing to watch out for - make sure you coordinate with the buyer's accountant if possible. I've seen cases where mismatched allocations between buyer and seller 8594 forms triggered IRS inquiries. The continued operation of your client's business actually makes this coordination even more important since it might raise questions about whether all relevant assets were properly identified and allocated.