Small Business

Subject to certain exceptions sole proprietorships, C and S Corporations, Partnerships and 1041 Fiduciaries must file Form 8594 when a business is sold inclusive of goodwill. Speak to your local CPA about the Form 8594 requirements.

The cost of business intangibles such as Goodwill, covenants not to compete amounts, trademarks are amortized over a 15 year period. Most intangible assets are expected to benefit more than one year, so their cost is a capital expenditure under Internal Revenue Code section 167 (depreciation), the primary authority for deducting intangibles

No. You cannot make a tax free "like kind" exchange of goodwill from one business to another.

You and your local CPA can structure the sale using the installment method. The installment method is a special method of reporting gains from sales of property where at least one payment is received in a tax year after the year of sale. Under the installment method gain from an installment sale is prorated and recognized over the years in which payments are received. The installment gain is reported on IRS Form 6252.

Any ordinary income as a result of the sale of a business asset must be reported as income in the year of sale regardless of when payment is actually received. If the business sale includes Inventory or Accounts receivables then these assets cannot be part of the installment sale. Speak to your local CPA about your business sale for more details.

Yes. IRS Form 8594 is used to allocate the sales price over the purchased assets. On Form 8594 are 7 classes. The assets are allocated from class 1 through class 7. Class 1 = cash type assets such as bank accounts. Class 2 include assets such as CD's US government securities, foreign currency and readily marketable securities or stock. Class 3 include marks-to-market including accounts receivable. Class 4 are stock in trade assets included in inventory. Class 5 are all other assets other than 1,2,3,4 assets. Class 6 are section 197 intangibles except goodwill and going concern assets. Class 7 are goodwill and going concern assets.

Generally buildings fall into the nonresidential real property category with a class life of more than 27.5 years which will be depreciated over 39 years.

Generally, equipment will be depreciated over 5 or 7 years.

Customer lists cannot be deducted in full at the date of the purchase. Generally, The fair market value of the customer list must be amortized over 15 years.