Can any one help me with guidance on an LLC tax payer purchasing customer list with annual install cash settlement for three years? Thanks!

[TaxesTech]

Taxpayer is using cash accounting and LLC is a single member disregarded entity.

[George4Tacks]

This Link may be helpful

Amortize the client list for 15 years, using the full purchase cost. Make the payments over the next 3 years, not deductible. Deduct any interest charge as interest. 

[Rick19744]

While the facts are limited, the buyer and seller may be required to complete form 8594.  It is not unusual that a customer list can make up the majority of a trade or business; and most likely the only asset that has value.

https://www.irs.gov/forms-pubs/about-form-8594

[BobKamman]

I think a high percentage of buyers and sellers first hear about Form 8594 a year or so after the deal is completed.  I wondered what the penalty would be, if it's not filed with a return.  Apparently it's $250 under Section 6721.  

You can always pay your accountants and lawyers $500 to make sure the form is completed and filed correctly.  

[Rick19744]

While there may be sarcasm in the response, we don't make the rules.  Our role is to prepare the return in accordance with the code and regulations.

In addition, not following a simple requirement like this can lead to additional scrutiny.

The OP asked for help and it was provided.

[IRonMaN]

Well, I certainly hope you learned your lesson Bob - no sarcasm allowed here.  I sure am glad I have always followed those rules.  I would hate to face additional scrutiny from Intuit for use of sarcasm.  Or can we use it as long as we file a form saying we are using it?

[TaxesTech · Accepted solution]

Love your answer!  Thank you so much George4Tacks! 

[TaxesTech]

I'm still reading through the instructions and saw this answer.  This is so helpful.  Thank you!!

[TaxesTech]

LOL - so Intuit audit our sarcasm level or search for a cowboy at large?  🙂

[BobKamman]

@IRonMaN   I would reply but I have used my Sarcasm Badge allotment for today.  I will come back tomorrow, maybe, if you remind me.  I didn't think anyone here would recognize himself in a reference to those who charge $500 to avoid a $250 penalty, but I must have hit a nerve.  

Now I'm worried about additional scrutiny from IRS because I always check the "let IRS figure it" box for the 2210 when I know the ES penalty is going to be less than $100 and not billed.  And to think, I could be charging another $50 for including that page.