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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28886
Experience:  Taxes, Immigration, Labor Relations
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Within 90 days after the Closing, the Buyer shall prepare an

Customer Question

Within 90 days after the Closing, the Buyer shall prepare an allocation of the Purchase Price (and all other capitalized costs) among the Acquired Assets in accordance with U.S. Internal Revenue Code Section 1060 and the Treasury regulations thereunder (as well as any similar provision of state and local law, as appropriate) and in a manner consistent with the allocation set forth above, which allocation shall be binding upon the Seller. Buyer and the Seller shall report, act and file tax returns (including, but not limited to Internal Revenue Service Form 8594) in all respects and for all purposes consistent with such allocation prepared by Buyer. Neither Buyer nor Seller shall take any position (whether in audits, tax returns or otherwise) that is inconsistent with such allocation unless required to do so by applicable law...
My question is would this be dangerous to sign due to taxes. It is part of a buy sale agreement.I worry they will allocate assets to benefit them but hurt me ?
Submitted: 10 months ago.
Category: Tax
Expert:  Lev replied 10 months ago.
That MUST be part of the sale negotiation.
Expert:  Lev replied 10 months ago.
The issue is that allocation affects both - the buyer and the seller - specifically -- it affect how the seller calculate the gain for each asset- if affect the buyer how the buyer depreciate / amortize assetsForm 8594 must be signed by both the buyer and the seller - both the buyer and the seller must agree to valuation.Generally, both the purchaser and seller must file Form 8594 and attach it to their income tax returns when there is a transfer of a group of assets that make up a trade or business and the purchaser s basis in such assets is determined wholly by the amount paid for the assets...I appreciate if you take a moment to rate the answer.Experts are ONLY credited when answers are rated positively.If you still have any doubts, need clarification - please be sure to ask.I am here to help you with all tax related issues.