Is this page tax advice on Form 8594?
No. It is a grocery usage note. A CPA who has closed an independent grocery file owns the return and the class amounts.
Form 8594 — IRS Asset Acquisition Statement under Section 1060. Buyer and seller each file it to report how an asset sale price was split among IRS classes. On a grocery close those classes are usually inventory, furniture and fixtures, a covenant if you priced one, and goodwill. The IRS page is About Form 8594. This note is grocery usage, not a substitute for a return.
Print last year’s P&L, the draft asset purchase agreement, and a honest stockroom guess. Grocery Store Business Broker — HedgeStone Business Advisors, led by Jason Taken — treats Form 8594 as the tax photograph of a deal you already negotiated. Book a confidential intro when you want the allocation conversation on the same table as the recast, not as a surprise in April.
Classes the grocery fight actually lives in
Purchase price allocation is the business argument. Form 8594 is how that argument becomes a filing. Grocery fights concentrate on the stockroom. Inventory sold in an asset deal is typically ordinary income to the seller and the buyer’s opening cost of goods. Pushing dollars from inventory into goodwill can look like a tax win for one side and a later letter for both. Fixtures sit in the middle: the buyer wants depreciable basis; the seller watches recapture. Residual goodwill is often the capital piece. None of that is a rate this page will invent. Taxes on selling a grocery store is the longer tax map. Capital gains on a grocery sale is the short seller question.
Do not bury inventory at cost inside a goodwill headline and then hope the 8594 will “smooth it.” The count is a separate check on closing night. The class on the form should describe that check, not a rumor multiple. Counsel papers the APA. A CPA signs the tax file. Working with attorneys and CPAs belongs in week one if neither advisor has closed a supermarket asset deal.
A stock sale of the operating company is a different wrapper. Licenses and contracts may stay in the entity, and Form 8594 is not the tool for that equity transfer. Asset sale versus stock sale is the fork. Most independent groceries still close as assets so the buyer can step up basis and leave entity liabilities behind. The 8594 follows that choice. It does not create it.
Matching filings beat a handshake allocation
The two Form 8594s need to tell the same story. If the seller’s inventory class and the buyer’s inventory class disagree, someone is explaining a close the IRS did not see the same way. “We will allocate later” is how grocery files get examined. Write the method into the letter of intent: inventory at seller’s cost on a third-party count, fixtures at an agreed schedule, residual to intangibles and goodwill. Then copy that method into the APA exhibits. Form 8594 reports those numbers. It is not a third price.
Related-party rent, owner autos, and a house on the store books belong in the SDE recast. They do not belong as a secret class on the 8594. If the building sells with the store, realty is its own allocation problem and often its own closing. Do not let a dirt number swallow the going concern, or the reverse, without a CPA who will sign both files.
Put allocation in the LOI, not at the 8594 deadline
Sellers want capital treatment. Buyers want basis they can depreciate and a cost of goods they can sell through. That tension is ordinary. Leaving it for the week after the inventory count is how a “done” deal reopens. Preview the split when you book the intro. Bring the APA draft if you have one. Bring an inventory range. The hour is for the classes you can defend, not for a trophy goodwill percentage.
If the only question is vocabulary, the glossary hub lists the neighboring terms. If you have a file, mark the allocation next to the recast and put both in writing before anyone files Form 8594.
Worked math for Form 8594 on a grocery asset sale
These figures are a teaching walk-through for Form 8594 on a grocery asset sale, not a quote and not a sold comp. Order of operations: weekly sales, recast SDE, inventory at cost, then a multiple band.
| Input or output | Illustrative figure |
|---|---|
| Weekly sales (illustrative) | $228,000 |
| Annual sales | $11,856,000 |
| Recast SDE | $426,816 (3.6% of sales) |
| Inventory at cost | $592,800 (~20 turns) |
| Occupancy check | $438,672 / year (3.7% of sales) |
| Low going-concern | $1,382,410 at 1.85x SDE + inventory |
| High going-concern | $1,873,248 at 3.00x SDE + inventory |
| Sketch DSCR on a note | 1.51 |
If weekly sales or shrink move 8 percent, the SDE and the note move with them. That is why Jason Taken starts with scan data and the lease, not with a neighbor's rumor multiple.
Book the intro call with your side of the table ready: seller files or buyer capital. The calendar is the only next step.