client selling C-Corp

[tax info man]

I have a client that is selling a C-Corp in an asset sale. I just wanted to check and make sure that everything was being handled correctly on my end.


My check points that I would appreciate feedback on are:

He has personal goodwill and it is being handled correctly in the contract. I am going to report this on the schedule D on his 1040 with zero basis

The goodwill of the corp will go on the schedule D of the 1120 and I will need to fill out an 8594 and send that in with the 1120.

The non-compete covenant will go on the 1120 schedule 4797 part II as ordinary income because it is seperate from the goodwill.

The sale of inventory will go on the front of the 1120 and not on the 4797 correct.

I have read some of the forums and love the site and just wanted to double check.

[ChEAr$]

Goodwill

I have a client that is selling a C-Corp in an asset sale. I just wanted to check and make sure that everything was being handled correctly on my end.


My check points that I would appreciate feedback on are:

He has personal goodwill and it is being handled correctly in the contract. I am going to report this on the schedule D on his 1040 with zero basis

The goodwill of the corp will go on the schedule D of the 1120 and I will need to fill out an 8594 and send that in with the 1120.

The non-compete covenant will go on the 1120 schedule 4797 part II as ordinary income because it is seperate from the goodwill.

The sale of inventory will go on the front of the 1120 and not on the 4797 correct.

I have read some of the forums and love the site and just wanted to double check.

First, bear in mind that the contract itself had better be between the corporation and
the buyer relative to selling corporate assets. You do have a copy of the contract, right?

But what I'm puzzled about is just how your client can have goodwill to be sold over and
above that of the corporation? If so, it should of course be covered in a separate
contract between himself and the buyer; and not part and parcel of the corporate sale.

Remember, there are three parties involved here.

[Burke]

There was a previous thread on this issue. Titled "personal goodwill" and started on 2/1/08 by Katie. There can be personal goodwill and corporate goodwill as well. Bees Knees' response had an excellent example & RJM's response also had references.

[tax info man]

further clarification

i read the thread but there is some vagueness about the answers, I put what I thought was the correct answer from what I had read but I just wanted to double check.