Client who was amortizing Goodwill with purchase of business and assets. He lost the business and everything was repossessed. How do I treat the goodwill that has been amortized?
-
-
Amortization
Part, or possibly all, of the amount he paid to buy the business was allocated to goodwill.How do I treat the goodwill that has been amortized?
The amortization reduces his basis in the business.
The repossession of the business is a disposition that results in a gain or loss.
For a discussion of how to calculate and report a gain or loss that arises out of a foreclosure or repossession, see Pub. 544, Sales and Other Dispositions of Assets.
For a discussion of how to allocate a portion of the cost of the business to goodwill, see Pub. 551, Basis of Assets. But presumably that allocation was already done, because somehow someone had a basis for determining the amount of amortization on prior year returns.
The disposition of the business is reported on Form 4797.
BMKBurton M. Koss
koss@usakoss.net
____________________________________
The map is not the territory...
and the instruction book is not the process.
Comment