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Common questions about 8594 in ProConnect Tax

by ProConnect Tax Online Updated 7 months ago

To generate Form 8594:

The Input for the Form 8594 Asset Acquisition Statement is the same for Individual, Corporate, S Corporate, Partnership and Fiduciary returns:

  1. Go to Input Return Miscellaneous Forms.
  2. Select Asset Acquisition Statement (8594).
  3. Enter a 1 or 2 in the field 1=buyer, 2=seller (MANDATORY).
  4. Enter the Date of sale.
  5. Enter the information in the Other Party subsection.
  6. If you want a Form 8594 for the Other Party, select the box, Print Form 8594 for other party. This copy will come out at the beginning of the return.
  7. Enter the remainder of the information in this screen as agreed upon by the parties involved

Note:  The information entered on this screen goes only to Form 8594.

How to file Form 8594 with a controlled foreign corporation

If the purchaser is a controlled foreign corporation, then all of the involved US shareholders need to fill out Form 8594, Asset Acquisition Statement Under Section 1060, and attach them to their Form 5471, Information Return of US Persons With Respect To Certain Foreign Corporations.

The different classes of assets: From the Form 8594 Instructions:

  • Class I assets are cash and general deposit accounts (including savings and checking accounts) other than certificates of deposit held in banks, savings and loan associations, and other depository institutions.
  • Class II assets are actively traded personal property within the meaning of section 1092(d)(1) and Regulations section 1.1092(d)-1 (determined without regard to section 1092(d)(3)). In addition, Class II assets include certificates of deposit and foreign currency even if they are not actively traded personal property. Class II assets do not include stock of seller's affiliates, whether or not actively traded, other than actively traded stock described in section 1504(a)(4). Examples of Class II assets include U.S. government securities and publicly traded stock.
  • Class III assets are assets that the taxpayer marks-to-market at least annually for federal income tax purposes and debt instruments (including accounts receivable). However, Class III assets do not include:
    • Debt instruments issued by persons related at the beginning of the day following the acquisition date to the target under section 267(b) or 707;
    • Contingent debt instruments subject to Regulations sections 1.1275-4 and 1.483-4, or section 988, unless the instrument is subject to the noncontingent1.1275-4(b) or is described in Regulations section 1.988-2(b)(2)(i)(B)(2); and
    • Debt instruments convertible into the stock of the issuer or other property.
  • Class IV assets are stock in trade of the taxpayer or other property of a kind that would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year, or property held by the taxpayer primarily for sale to customers in the ordinary course of its trade or business.
  • Class V assets are all assets other than Class I, II, III, IV, VI, and VII assets.
    • Note. Furniture and fixtures, buildings, land, vehicles, and equipment, which constitute all or part of a trade or business (defined earlier) are generally Class V assets.
  • Class VI assets are all section 197 intangibles (as defined in section 197) except goodwill and going concern value.
    • Section 197 intangibles include:
      • Workforce in place;
      • Business books and records, operating systems, or any other information base, process, design, pattern, know-how, formula, or similar item;
      • Any customer-based intangible;
      • Any vendor-based intangible;
      • Any license, permit, or other right granted by a government unit;
      • Any covenant not to compete entered into in connection with the acquisition of an interest in a trade or a business; and
      • Any franchise, trademark, or trade name (however, see exception below for certain professional sports franchises).
        • See section 197 (d) for more information.
    • The term ?section 197 intangible? does not include any of the following:
      • An interest in a corporation, partnership, trust, or estate;
      • Interests under certain financial contracts;
      • Interests in land;
      • Certain computer software;
      • Certain separately acquired interests in films, sound recordings, video tapes, books, or other similar property;
      • Interests under leases of tangible property;
      • Certain separately acquired rights to receive tangible property or services;
      • Certain separately acquired interests in patents or copyrights;
      • Interests under indebtedness;
      • Professional sports franchises acquired before October 23, 2004; and
      • Certain transactions costs.
        • See section 197(e) for more information.
  • Class VII assets are goodwill and going concern value (whether or not the goodwill or going concern value qualifies as a section 197 intangible).
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