Extract to table

The total consideration for the acquisition (including the base purchase price, assumed liabilities, contingent earnout consideration, and any working capital adjustments) must be allocated among seven asset classes (Classes I through VII) under IRC § 1060, utilizing the residual method prescribed by Treasury Regulations §§ 1

The characterization of specific improvements must be analyzed on a lease-by-lease basis, taking into account the nature of the improvement, the remaining lease term, and applicable renewal options

If the total consideration is subsequently adjusted — for example, due to earnout payments, working capital true-up adjustments, or indemnification payments — amended Forms 8594 must be filed by both Buyer and Seller to reflect the revised consideration and updated allocation

if its fair market value can be reasonably ascertained at the time of the sale — the fair market value of the right is included in the seller's amount realized at the time of the sale, and must be included in the initial § 1060 allocation

Under IRC § 1060 and the residual method, the additional consideration must be allocated among the acquired assets