Discussion:Goodwill disposition
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Discussion Forum Index --> Tax Questions --> Goodwill disposition
| 31 August 2006 | |
| Okay - I'm already not comfortable with the following scenario, but humor me and assume there's no problems.
C Corp is dissolving and has $11,000 of unamortized goodwill remaining. Two shareholders will part ways and continue separate businesses as sole proprietors. Assume that half of the remaining goodwill is now worthless. First, can this worthless portion be written off? (there are no other 197 intangibles) Second, if so, will the event causing worthlessness constitute a sale or exchange for purposes of Sec. 1231 so that the loss will be ordinary? Shareholders want to each take half of remaining goodwill for their Sch. C's. I don't know, I feel like I'm missing something. Research is proving fruitless. | |
| 13 September 2006 | |
| Since goodwill is normally purchased, sell half to each shareholder at net book value. | |
| 14 September 2006 | |
| In certain non-recognition transfers of Sec. 197 intangibles, the transferee steps into the shoes of the transferor for purposes of the Sec. 197 amortization, loss recognition, and anti-churning rules. See, for example, Internal Revenue Code ยง 197(f)(2)(B). However, this is not a non-recognition transfer, and I believe that the loss should be allowed as a 1231 loss under Sec. 197(f)(7). | |
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