
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC1060]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
          Subchapter O--Gain or Loss on Disposition of Property
 
                         PART IV--SPECIAL RULES
 
Sec. 1060. Special allocation rules for certain asset 
        acquisitions
        

(a) General rule

    In the case of any applicable asset acquisition, for purposes of 
determining both--
        (1) the transferee's basis in such assets, and
        (2) the gain or loss of the transferor with respect to such 
    acquisition,

the consideration received for such assets shall be allocated among such 
assets acquired in such acquisition in the same manner as amounts are 
allocated to assets under section 338(b)(5). If in connection with an 
applicable asset acquisition, the transferee and transferor agree in 
writing as to the allocation of any consideration, or as to the fair 
market value of any of the assets, such agreement shall be binding on 
both the transferee and transferor unless the Secretary determines that 
such allocation (or fair market value) is not appropriate.

(b) Information required to be furnished to Secretary

    Under regulations, the transferor and transferee in an applicable 
asset acquisition shall, at such times and in such manner as may be 
provided in such regulations, furnish to the Secretary the following 
information:
        (1) The amount of the consideration received for the assets 
    which is allocated to section 197 intangibles.
        (2) Any modification of the amount described in paragraph (1).
        (3) Any other information with respect to other assets 
    transferred in such acquisition as the Secretary deems necessary to 
    carry out the provisions of this section.

(c) Applicable asset acquisition

    For purposes of this section, the term ``applicable asset 
acquisition'' means any transfer (whether directly or indirectly)--
        (1) of assets which constitute a trade or business, and
        (2) with respect to which the transferee's basis in such assets 
    is determined wholly by reference to the consideration paid for such 
    assets.

A transfer shall not be treated as failing to be an applicable asset 
acquisition merely because section 1031 applies to a portion of the 
assets transferred.

(d) Treatment of certain partnership transactions

    In the case of a distribution of partnership property or a transfer 
of an interest in a partnership--
        (1) the rules of subsection (a) shall apply but only for 
    purposes of determining the value of section 197 intangibles for 
    purposes of applying section 755, and
        (2) if section 755 applies, such distribution or transfer (as 
    the case may be) shall be treated as an applicable asset acquisition 
    for purposes of subsection (b).

(e) Information required in case of certain transfers of interests in 
        entities

                           (1) In general

        If--
            (A) a person who is a 10-percent owner with respect to any 
        entity transfers an interest in such entity, and
            (B) in connection with such transfer, such owner (or a 
        related person) enters into an employment contract, covenant not 
        to compete, royalty or lease agreement, or other agreement with 
        the transferee,

    such owner and the transferee shall, at such time and in such manner 
    as the Secretary may prescribe, furnish such information as the 
    Secretary may require.

                        (2) 10-percent owner

        For purposes of this subsection--

        (A) In general

            The term ``10-percent owner'' means, with respect to any 
        entity, any person who holds 10 percent or more (by value) of 
        the interests in such entity immediately before the transfer.

        (B) Constructive ownership

            Section 318 shall apply in determining ownership of stock in 
        a corporation. Similar principles shall apply in determining the 
        ownership of interests in any other entity.

                         (3) Related person

        For purposes of this subsection, the term ``related person'' 
    means any person who is related (within the meaning of section 
    267(b) or 707(b)(1)) to the 10-percent owner.

(f) Cross reference

            For provisions relating to penalties for failure to file a 
        return required by this section, see section 6721.

(Added Pub. L. 99-514, title VI, Sec. 641(a), Oct. 22, 1986, 100 Stat. 
2282; amended Pub. L. 100-647, title I, Sec. 1006(h)(1), (2), (3)(B), 
Nov. 10, 1988, 102 Stat. 3410; Pub. L. 101-508, title XI, Sec. 11323(a), 
(b)(1), Nov. 5, 1990, 104 Stat. 1388-464; Pub. L. 103-66, title XIII, 
Sec. 13261(e), Aug. 10, 1993, 107 Stat. 539.)


                            Prior Provisions

    A prior section 1060 was renumbered section 1061 of this title.


                               Amendments

    1993--Subsec. (b)(1). Pub. L. 103-66, Sec. 13261(e)(1), substituted 
``section 197 intangibles'' for ``goodwill or going concern value''.
    Subsec. (d)(1). Pub. L. 103-66, Sec. 13261(e)(2), substituted 
``section 197 intangibles'' for ``goodwill or going concern value (or 
similar items)''.
    1990--Subsec. (a). Pub. L. 101-508, Sec. 11323(a), inserted at end 
``If in connection with an applicable asset acquisition, the transferee 
and transferor agree in writing as to the allocation of any 
consideration, or as to the fair market value of any of the assets, such 
agreement shall be binding on both the transferee and transferor unless 
the Secretary determines that such allocation (or fair market value) is 
not appropriate.''
    Subsecs. (e), (f). Pub. L. 101-508, Sec. 11323(b)(1), added subsec. 
(e) and redesignated former subsec. (e) as (f).
    1988--Subsec. (b)(3). Pub. L. 100-647, Sec. 1006(h)(1), substituted 
``deems'' for ``may find''.
    Subsec. (d). Pub. L. 100-647, Sec. 1006(h)(2), added subsec. (d).
    Subsec. (e). Pub. L. 100-647, Sec. 1006(h)(3)(B), added subsec. (e).


                    Effective Date of 1993 Amendment

    Amendment by Pub. L. 103-66 applicable, except as otherwise 
provided, with respect to property acquired after Aug. 10, 1993, see 
section 13261(g) of Pub. L. 103-66, set out as an Effective Date note 
under section 197 of this title.


                    Effective Date of 1990 Amendment

    Amendment by Pub. L. 101-508 applicable to acquisitions after Oct. 
9, 1990, but not applicable to any acquisition pursuant to a written 
binding contract in effect on Oct. 9, 1990, and at all times thereafter 
before such acquisition, see section 11323(d) of Pub. L. 101-508, set 
out as a note under section 338 of this title.


                    Effective Date of 1988 Amendment

    Amendment by Pub. L. 100-647 effective, except as otherwise 
provided, as if included in the provision of the Tax Reform Act of 1986, 
Pub. L. 99-514, to which such amendment relates, see section 1019(a) of 
Pub. L. 100-647, set out as a note under section 1 of this title.


                    Effective Date of 1986 Amendment

    Section 641(c) of Pub. L. 99-514 provided that: ``The amendments 
made by this section [enacting this section and renumbering former 
section 1060 as 1061] shall apply to any acquisition of assets after May 
6, 1986, unless such acquisition is pursuant to a binding contract which 
was in effect on May 6, 1986, and at all times thereafter.''

                  Section Referred to in Other Sections

    This section is referred to in section 6724 of this title.
