# Should you buy a dental practice’s assets or its stock? In an asset purchase a buyer acquires selected practice assets, while in a stock or entity purchase the buyer acquires the owning company and everything in it. For an asset purchase, the IRS requires Form 8594 to allocate the price across seven asset classes, so the choice has tax consequences for both sides ([deal-sourcing guide](https://ddsintel.com/deal-sourcing)). By DDSIntel Editorial Team. Source: DDSIntel, https://ddsintel.com/deal-sourcing/asset-vs-stock-purchase. Published 2026-10-26; data as of 2026-10-25. ## Key numbers - **7** asset classes, Class I to VII, are used on IRS Form 8594 to allocate an asset purchase price (IRS, Instructions for Form 8594, 2026; https://www.irs.gov/instructions/i8594) - **60%** percent of price paid in cash at close, low end of DSO offers (TUSK Practice Sales, Q3 2026 dental market report, 2026; https://www.prnewswire.com/news-releases/tusk-practice-sales-assesses-the-state-of-the-dental-industry-in-its-q3-2026-dental-market-report-302823046.html) - **85%** percent of price paid in cash at close, high end of DSO offers (TUSK Practice Sales, Q3 2026 dental market report, 2026; https://www.prnewswire.com/news-releases/tusk-practice-sales-assesses-the-state-of-the-dental-industry-in-its-q3-2026-dental-market-report-302823046.html) - **5,000,000** US dollars, the maximum amount of most SBA 7(a) loans (SBA, 2026; https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility) ## What is the difference between an asset and a stock purchase? In an asset purchase the buyer selects what it takes, such as equipment, patient records, goodwill and the lease, and generally leaves unwanted liabilities with the seller. In a stock purchase the buyer takes the entity, including its contracts, history and liabilities. Counsel should advise which fits the deal. The structure shapes the letter of intent terms, [financing](https://ddsintel.com/deal-sourcing/financing-a-practice-acquisition) and the checks in [public-record diligence](https://ddsintel.com/deal-sourcing/public-record-checks-before-loi). ## What does IRS Form 8594 do? Generally, both purchaser and seller must file Form 8594 and attach it to their income tax returns for the year of sale when a group of assets making up a trade or business is transferred. It reports how the price is allocated across seven asset classes under the residual method. Buyer and seller allocations should agree, and the allocation affects each side’s tax result. Have each side’s CPA review it before the contract is signed. ## Why do sellers and buyers often prefer different structures? Buyers often favor asset purchases because they choose assets and limit inherited liabilities. Sellers may prefer a stock sale for a simpler exit and different tax treatment. The gap is usually bridged in price and terms, so the preferred structure should be raised at the letter of intent, not at closing. Tax outcomes depend on entity type and facts. This is general information, not tax or legal advice. ## How does structure affect how the price is paid? Structure interacts with payment terms. TUSK Practice Sales reports DSO offers with 60% to 85%+ of consideration paid as cash at close, and the balance deferred or contingent. Deferred parts need clear security, tax treatment and timing, and a lender may set limits on seller notes. Valuation context is in [how practices are valued](https://ddsintel.com/deal-sourcing/how-dental-practices-are-valued). [Dental transition signals](https://ddsintel.com/signals) can show when owners in a market are likely to be considering a sale. ## Frequently asked questions ### Which structure should I choose? It depends on the practice, the entity and the tax position of each side; counsel and your CPA decide. ### Do I need Form 8594 for a stock purchase? Generally the form applies to asset acquisitions that make up a trade or business. Your CPA confirms whether it applies. ### Can I keep the seller’s lease and payer contracts? That depends on assignment terms and consents; confirm them in diligence. ### Where can I read the IRS instructions? The IRS publishes them as the instructions for Form 8594. See [dental market data](https://ddsintel.com/data) for supply context. ## Sources 1. Internal Revenue Service. Instructions for Form 8594 (Asset Acquisition Statement). https://www.irs.gov/instructions/i8594 2. TUSK Practice Sales. TUSK Practice Sales Assesses the State of the Dental Industry in Its Q3 2026 Dental Market Report (July 10, 2026). https://pr.timesenterprise.com/article/TUSK-Practice-Sales-Assesses-the-State-of-the-Dental-Industry-in-Its-Q3-2026-Dental-Market-Report/6a514c9516e7610b3c53e15d 3. U.S. Small Business Administration. 7(a) loan program: terms, conditions and eligibility. https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility --- DDSIntel is a dental transition intelligence platform that detects pre-market dental practice transition signals for brokers, DSOs, lenders and the firms that serve them.