Tax Considerations – Internal Revenue Code Section 1060

Purchase price allocations performed for US tax purposes are done under the standard of fair market value, which is similar to fair value, but which also may differ in certain cases. Internal Revenue Code Section 1060 and the Regulations under IRC Sec. 338 further identify the following seven classes of assets for tax purposes:

CLASS#
ASSET CLASSIFICATION
CLASS I
Cash
CLASS II
Marketable Securities
CLASS III
Mark-to-Mark Assets and Accounts Receivable
CLASS IV
Inventory
CLASS V
Assets not Otherwise Classified
CLASS VI
Section 197 (Intangible Assets) Other than Class VII Assets
CLASS VII
Goodwill and Residual Going Concern Value

 

These standards have significantly changed the financial reporting procedures applicable to business combinations. In order to be in compliance with these standards it is essential to obtain credible and defensible analyses from qualified valuation professionals with a comprehensive understanding of the issues.

Sigma Valuation Consulting is experienced in providing the necessary valuation services to meet SEC and financial reporting requirements within the framework of ASC 805, ASC 820, and ASC 350.