Goodwill

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  • Brenda59
    Junior Member
    • Feb 2015
    • 3

    #1

    Goodwill

    I have a client who purchased a business a couple of years ago which included $30K goodwill that has been amortized with a balance of approx. $25K....they sold the business in May 2014...selling price includes $60K goodwill....how do I handle this....is the old goodwill sold at zero and the new goodwill capital gain?
  • Burke
    Senior Member
    • Jan 2008
    • 7068

    #2
    If he purchased the goodwill originally, and has been amortizing it, then he has basis. If he sold it for more than he paid for it, he has a gain. $60K - 25K = $35K. I am sure the new owner is happy with that allocation. The TP may not be. The new owner will amortize at $60K.
    Last edited by Burke; 02-02-2015, 03:46 PM.

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    • Lion
      Senior Member
      • Jun 2005
      • 4699

      #3
      Your client sold his goodwill for $60K and its adjusted cost basis is about $25K, so he has about a $35K profit on that portion of his sale. (He did good in business, so his goodwill was worth more when he sold it than when he started.)

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      • Brenda59
        Junior Member
        • Feb 2015
        • 3

        #4
        A 1245 Gain up to allowed amortization?

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        • JON
          Senior Member
          • Jul 2005
          • 1265

          #5
          Brenda nailed the issue!!!! Is the business closed after the sale???

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