Company bought business

[mvp2885]

A potential client is asking how she should of reported the acquisition of another business. So here’s the short end of it. She bought a Business from another person. So she is asking what form should that person gotten?

my understanding is that they should of filled out form 8594? Well she didn’t do that during the time it was acquired. Any suggestions? Or any forms she needs to provide to the person she bought the business from? Thank you.

[ATSMAN]

I am assuming it is not a Partnership or Corporation??

When To File

Generally, attach Form 8594 to your income tax return for the year in which the sale date occurred.If the amount allocated to any asset is increased or decreased after the year in which the sale occurs, the seller and/or purchaser (whoever is affected) must complete Parts I and III of Form 8594 and attach the form to the income tax return for the year in which the increase or decrease is taken into account.

Penalties
If you do not file a correct Form 8594 by the due date of your return and you cannot show reasonable cause, you may be subject to penalties. See sections 6721 through 6724.

[mvp2885]

It was actually a partnership.

[TaxGuyBill]

What exactly did she buy? A Partnership interest? Assets? Goodwill/going concern (such as a client list, etc.)? Something else?

If the purchase included Goodwill/going concern and other assets, yes, the price needs to be allocated among the assets and a 8594 is filed with both your clients tax return and the seller's tax return. Although it is ideal that they should match, if the buyer and seller can't agree on it now, just do your best with it.

From what you have said so far, I can't think of any form that your client would need to give the seller.

[mvp2885]

She bought assets and a client list. The guy she bought the business from now lives out of state and unfortunately they aren’t talking. So just do the best on filing 8594?

[ATSMAN]

She bought assets and a client list.

After you deduct the price paid for the equipment and assets, whatever left is goodwill the client list value, unless an amount was agreed between parties for the client list.