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?
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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. -
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.)Comment
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A 1245 Gain up to allowed amortization?Comment
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Brenda nailed the issue!!!! Is the business closed after the sale???Comment
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