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What is IRS Form 8594 in a dental practice sale?

For firms that serve dental practices, IRS Form 8594 reports how the price of a business sale is allocated among seven asset classes, and both the seller and the purchaser of a group of assets that makes up a trade or business must use it. For a dental practice, the split between equipment and goodwill is usually the center of the negotiation.

By DDSIntel Editorial· Published · Data as of

Key numbers

Who files Form 8594, and when?

The IRS says both the seller and purchaser of a group of assets that makes up a trade or business must use Form 8594 if goodwill or going concern value attaches, or could attach, to the assets. The instructions say to attach it to the income tax return for the year in which the sale date occurred.

This is general information, so have your CPA review how it applies to a particular sale. See the CPAs and attorneys hub and dentist age distribution for who is selling.

What are the seven asset classes?

Class I is cash and general deposit accounts, Class II is actively traded personal property, Class III is assets marked to market at least annually, Class IV is stock in trade, Class V is all other assets, Class VI is section 197 intangibles except goodwill and going concern value, and Class VII is goodwill and going concern value.

Why does allocation matter in a dental practice sale?

Equipment generally falls in Class V and goodwill in Class VII, so the allocation decides how much of the price each class carries. The buyer and seller can have different tax interests in that split, and both report it. Agree the allocation in the purchase agreement and have both sides’ CPAs review it.

The agreement clause is covered in key clauses in a dental practice purchase agreement.

What should be settled before the allocation is reported?

Settle the structure, the headline price and how it is paid before allocating, since cash at close, deferred payments and non-compete value all affect reporting. TUSK Practice Sales saw DSO offers at 60% to 85% or more cash at close; structure differs across deals. See multiples and cash at close.

Frequently asked questions

Is Form 8594 only for asset sales?

The IRS describes it for a group of assets that makes up a trade or business and to which goodwill or going concern value attaches. Have a CPA confirm the form applies to the deal structure.

Do the buyer and seller file the same allocation?

Both file the form, and the allocation they report should be consistent. Agree it in the purchase agreement.

Is this tax advice?

No. It is general information from IRS publications. Clients should have their own CPA review.

Where does normalized earnings fit?

It sets the price; allocation sets reporting. See normalizing dental EBITDA and transition signals.

Sources

  1. Internal Revenue Service. Instructions for Form 8594 (Asset Acquisition Statement). irs.gov.
  2. Internal Revenue Service. Instructions for Form 8594. irs.gov.
  3. TUSK Practice Sales. TUSK Practice Sales Assesses the State of the Dental Industry in Its Q3 2026 Dental Market Report (July 10, 2026). pr.timesenterprise.com.

Questions or corrections: request a correction. Markdown version: /for/dental-practice-sale-tax-form-8594.md.