---
kind: "section"
citation: "26 U.S.C. § 1060"
title: "26"
title_heading: "Internal Revenue Code"
number: "1060"
heading: "Special allocation rules for certain asset acquisitions"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/26/1060"
units:
  - "Subtitle A — Income Taxes"
  - "Chapter 1 — Normal Taxes and Surtaxes"
  - "Subchapter O — Gain or Loss on Disposition of Property"
  - "Part IV — Special Rules"
---

# §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)](/usc/26/338.md?p=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](/usc/26/851.md?p=c-4) 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](/usc/26/851.md?p=c-4)) 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](/usc/26/197.md) intangibles.
  - (2) Any [modification](/usc/26/424.md?p=h-3) of the amount described in [paragraph (1)](#b-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](/usc/26/101.md?p=a-3-B))—
  - (1) of assets which constitute a [trade or business](/usc/26/1402.md?p=c), 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](/usc/26/1031.md) applies to a portion of the assets transferred.

- (d) **Treatment of certain partnership transactions—** In the case of a distribution of [partnership](/usc/26/761.md?p=a) [property](/usc/26/317.md?p=a) or a transfer of an [interest](/usc/26/856.md?p=f-1) in a [partnership](/usc/26/761.md?p=a)—
  - (1) the rules of [subsection (a)](#a) shall apply but only for purposes of determining the [value](/usc/26/851.md?p=c-4) of [section 197](/usc/26/197.md) intangibles for purposes of applying [section 755](/usc/26/755.md), and
  - (2) if [section 755](/usc/26/755.md) applies, such distribution or transfer (as the case may be) shall be treated as an applicable asset acquisition for purposes of [subsection (b)](#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](/usc/26/856.md?p=f-1) in such entity, and
    - (B) in connection with such transfer, such owner (or a [related person](/usc/26/864.md?p=d-4)) enters into an employment [contract](/usc/26/101.md?p=f-3-A), 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](/usc/26/851.md?p=c-4)) of the [interests](/usc/26/856.md?p=f-1) in such entity immediately before the transfer.
    - (B) **Constructive ownership—** [Section 318](/usc/26/318.md) shall apply in determining ownership of [stock](/usc/26/1504.md?p=a-4) in a corporation. Similar principles shall apply in determining the ownership of [interests](/usc/26/856.md?p=f-1) in any other entity.
  - (3) **Related person—** For purposes of this subsection, the term “[related person](/usc/26/864.md?p=d-4)” means any person who is related (within the meaning of section [267(b)](/usc/26/267.md?p=b) or [707(b)(1)](/usc/26/707.md?p=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.

## Source credit

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

## Notes

### Editorial Notes

### Prior Provisions

A prior section 1060 was renumbered section 1063 of this title.

### Amendments

1993—Subsec. (b)(1). Pub. L. 103–66, § 13261(e)(1), substituted “section 197 intangibles” for “goodwill or going concern value”.

Subsec. (d)(1). Pub. L. 103–66, § 13261(e)(2), substituted “section 197 intangibles” for “goodwill or going concern value (or similar items)”.

1990—Subsec. (a). Pub. L. 101–508, § 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, § 11323(b)(1), added subsec. (e) and redesignated former subsec. (e) as (f).

1988—Subsec. (b)(3). Pub. L. 100–647, § 1006(h)(1), substituted “deems” for “may find”.

Subsec. (d). Pub. L. 100–647, § 1006(h)(2), added subsec. (d).

Subsec. (e). Pub. L. 100–647, § 1006(h)(3)(B), added subsec. (e).

### Statutory Notes and Related Subsidiaries

### 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

Pub. L. 99–514, title VI, § 641(c), Oct. 22, 1986, 100 Stat. 2283, provided that: “The amendments made by this section [enacting this section and renumbering former section 1060 of this title as section 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.”