Hi. A TP sells a business and buyer/seller allocate a certain amount to goodwill. Seller did not purchase the goodwill, therefore it was never listed in the fixed assets. When selling the business, I believe the goodwill qualifies for LT capital gain treatment, correct? When reporting on the tax return, do I simply leave the date acquired blank and force it to long-term? Any advice is much appreciated. Thank you.
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Don't forget that Form 8594 needs to be filed by both purchaser and seller based on the allocation of assets mutually agreed upon. And purchaser (don't know who you're representing) should file a bulk sales tax return with the state to pay sales tax on tangible personal property purchased, and protect his/her interest from any unpaid liability of the seller.
Yes - so long as the Goodwill existed for more than a year from the seller - that is LT capital gain to seller.Uncle Sam, CPA, EA. ARA, NTPI Fellow -
Thanks, Uncle Sam. I'm with the seller, and he operated the business for many years. Is that enough to qualify the goodwill as long-term?Comment
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