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Discussion Forum Index --> Tax Questions --> Customer List
Chase (talk|edits) said:
| 4 October 2006
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| Just confirming that sale of customer list is ordinary income to seller and 15 year amort for the buyer. Also the non-compete is amortizable by buyer over the life of the non-compete, correct? Thanks
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JR1 (talk|edits) said:
| October 4, 2006
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| Hmmm, I thought customer lists were part of the general intangibles and would be cap gain treatment...? The non compete is amortized over 15 years regardless of length of the agreement. Yeah, I know it makes no sense. Just is.
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Bottom Line (talk|edits) said:
| 5 October 2006
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| I agree that customer list is general intangible. Ran into this problem with a website company. Former client purchased a website for $500,000. Virtually only asset was the customer list. He wanted to depreciate it over three years as Software. I saw his point because the customers would not be there in five years much less 15 years. I said it was unfortunately a general intangible and that three year software only applied to software which could be purchased "off the shelf" before any changes were made to it. I copied the tax code explaining this and gave it to him. He then decided to do his taxes himself using Turbo Tax. A couple of years later, I got a call from a CPA that he had hired to get him out of his mess. Apparently the client told the CPA that I had done the taxes for that year but hadn't signed them. Of course I told the CPA that I had not done the taxes and had told the client that the way he wanted the $500,000 investment handled was not correct. Last I heard the client was still fighting with the IRS and had hired a different CPA and a tax attorney for the fight.
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