Accounting News and Notes

Tax Filing for Business Sales and Acquisitions

Filing of IRS Tax Form 8594: Asset Acquisition Statement

When buying or selling a business one of the most frequently neglected tax forms is IRS Tax Form 8594: Asset Acquisition Statement. Generally both the purchaser and the seller must complete Form 8594 and attach it to their income tax returns (Form 1040, 1041,1065,1120,1120S etc) when there is a sale or transfer of a group of assets that make up or comprise a trade or business. The purchase price or basis in such assets is solely determined by the amount paid or the assets (i.e., the purchase price). The form is required, whether the group of assets constitutes a trade or business in the hands of the purchaser, the seller or both.

Form 8594 is attached to a taxpayers (individual, corporate, partnership) and applies to a LLC, LLP, C Corporation, S Corporation, Trust, Partnership or Proprietorship. Form 8594 should be included in the tax year and as part of the tax return to which the sale or purchase occurred. For purposes of determining if Form 8594 is required you would look to see if the group of assets that make up a trade or business has any going concern value or if goodwill would be attached to such assets.

Form 8594/Asset Acquisition Statement is addressed under IRS tax code Section 1060. The form requires both the seller or the purchaser to complete the form listing the other parties full address and Federal Identification Number/EIN. The form also requires that the total purchase price be allocated between six different classes of assets. These classes over, for example, cash, inventory, fixed assets and intangibles. For the purchaser this allocation is critical to ensure that all items purchased are correctly identified and treated correctly. For example in President Clintons first tax act he passed while President required intangibles, which are commonly referred to as going concern value or goodwill, to be amortized over fifteen years (these items are reflected on Section VI of Form 8594.

John Dillard is a Christian Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/ (An Atlanta  CPA firm) and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and to learn about his ministry visit http://www.john-dillard.com/ To contact John Dillard CPA (Atlanta Christian Author/Speaker) today call 770. 814.9304 proudly serving Duluth, GA, Gwinnett County and Beyond.

“Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!”

What, then, shall we say in response to this? If God is for us, who can be against us? Romans 8:31

Why are these verses here? Learn how HIS CPA became a Christian Accounting firm visit http://www.hiscpa.com/christian-CPA.html

We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Offer in Compromise, Back Taxes, Business Acquisition/Sales, Forensic Accounting, Business Valuations and Bookkeeping.

Section 179 Depreciation…Being Sure you Maximize Your Depreciation Deduction

Depreciation and all of its attendant rules are difficult for both the professional and laymen alike. Sifting through this maze of the tax code is a tenuous task. Perhaps there is no more important section of the tax code to consider when preparing your annual income tax return than the deduction for Section 179 depreciation. Whether you are a S Corporation, LLC, LLP, C Corporation, Partnership or proprietorship this one of the best deductions around and if used and claimed properly can do much to mitigate your current year tax bill. Section 179 depreciation has been around for decades in varying forms and limits. The law is intended to allow business owners to deduct in full, up to prescribed limits, the amount of fixed assets such as furniture, fixtures, computers, and office equipment the year that is purchased. Generally speaking this deduction does not apply to the purchase of fixed assets such a land, buildings, or passenger vehicles. Not only will this deduction help you mitigate your own tax bill but it will also stimulates the economy by encouraging the purchase of capital equipment.

In 2007 the Section 179 limit is $125,000 for most business and individuals and $160,000 if you are in a Qualified Enterprise Zone or for Renewable Community Property. The limit for business was originally set to increase for 2008 to $128,000 (as the amount is indexed annually for inflation), however the maximum amount was increased to $250,000 as a provision of the 2008 Economic Stimulus Act. The maximum limitations apply both at the corporate and personal level meaning that a single business or an individual taxpayer are limited to the maximum amount for that year. Proper tax planning should occur each and every tax year to ensure that all deductions are maximized to the full extent possible while being appropriately cautious about impacts on future year taxes. Section 179 tax elections and amounts claimed are also limited to a ceiling of a business’s profits for the year (i.e. they cannot exceed that years business profits for the maximum IRS set limit for the year). Any unused credits call be rolled forward to future qualifying years. Working with your CPA is the best way to ensure that you always pay only your lowest legally possible tax.

Contact John Dillard CPA of His CPA at 770 814 9304 and visit www.HisCPA.com

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